THE NEW MOT DECREE ON THE UPPER LIMIT TARIFF FOR ECONOMY CLASS PASSENGERS SERVICES IN DOMESTIC SCHED

Responding to a number of complaints from flight passengers, hotels and tourism industries on the high flight rates, on 15 May 2019, MoT decided to sign the MoT Decree No. 106 of 2019 on the Upper Limit Tariff for Economy Class Passengers Services in Domestic Scheduled Commercial Airlines. The MoT Decree No. 106 of 2019 revokes the previous decree, MoT Decree No. 72 of 2019 on the Upper Limit Tariff for Economy Class Passengers Services in Domestic Scheduled Commercial Airlines. With the enactment of MoT Decree 106/2019, MoT believes that the tariff will be more affordable, while remaining concerned about safety and security aspects of the aircrafts and maintaining the tariff balance between consumer protection and business sustainability.

Compared to MoT Decree No. 72 of 2019, tariffs for certain routes in the MoT Decree No. 106 of 2019 are decreased around 12% to 16%. For example, upper and lower limit tariff of jet aircraft for Jakarta to Kendari are decreased from Rp889,000 – Rp2,541,000 to Rp747,000 – Rp2,135,000. DGCA stated that the reduction in flight tariff will not reduce substantial factors such as safety, security and also the on time performance (OTP) of the airlines.

Moreover, in MoT Decree No.106 of 2019 some new routes are listed to the upper and lower limit tariff list, such as the route of jet aircraft from Sampit to Banjarmasin, Pontianak to Yogyakarta (YIA) and Kao to Makassar. However, certain routes are no longer listed in the upper and lower limit tariff list, such as the route of jet aircraft from Makassar to Masamba, Padang to Rengat, and Rote to Waingapu.

Beside of the tariff adjustments mentioned above, there are several clauses added in MoT Decree No. 106 of 2019. First, concerning the consideration taken as the basis of tariff determination in MoT Decree No. 106 of 2019, such as the impact to other sectors and socialization that has been conducted to air transport business entity, national aviation association and passengers. Second, the requirement of commercial airlines to give a report to the MoT through Directorate General of Civil Aviation (“DGCA”) on the tariff imposed to the passengers periodically every 3 (three) months. Third, MoT Decree No. 106 of 2019 requires the DGCA to perform periodic evaluation on the tariff, minimum every 3 (three) months, by paying attention to the following matters, such as public interest and flight safety and security.

In addition, other clauses or requirements remain unchanged from previous decree, such as the lower limit tariff must be at least 35% (thirty-five percent) of the upper limit tariff according to the specified passengers’ services and the commercial airlines should conduct publications of the tariff through newspaper and electronics and/or put up an announcement of the tariff in every airplane’s ticket counter.