THE NEW TARIFF SCHEME IN DOMESTIC SCHEDULED COMMERCIAL AIRLINES FOR ECONOMY CLASS PASSENGERS

In order to protect consumers of domestic scheduled commercial airlines from high fares, and to keep the sustainability of a fair business competition among the Indonesian commercial airlines, a new tariff scheme for domestic scheduled commercial airlines regulation and its procedures as well as calculation formula have finally been renewed by the MoT through the issuance of PM 20/2019 and KM 72/2019. Both regulations revoke the previous regulation namely the MoT Regulation Number PM 14 of 2016 on the Mechanism of Calculation Formula and Upper & Lower Limit Tariff Arrangement for Economy Class Passengers Services in Domestic Scheduled Commercial Airlines.

Under PM 20/2019 and KM 72/2019, the components of tariff calculation for economy class passenger’s services in domestic scheduled commercial airlines are still the same, however, the MoT increases the lower limit tariff from 30% (thirty percent) to at least 35% (thirty-five percent) of the upper limit tariff according to the specified passengers’ services. The lower limit tariff for economy class passengers’ services in domestic scheduled commercial airlines shall be applied by domestic scheduled commercial airlines.

According to PM 20/2019, the MoT shall announce and publish information regarding the changes or new upper limit tariff on economy class of passengers services in domestic scheduled commercial airlines through the official website of the Ministry of Transportation, Republic of Indonesia. It shall be noted that, the announced tariff excludes the Value-Added Tax (VAT) charge, insurance premium of PT Jasa Raharja (Persero), additional charges, and Aircraft Passengers Service Charge/Tarif Pelayanan Jasa Penumpang Pesawat Udara (PJP2U).

Upon obtaining routes approval from the MoT, domestic scheduled commercial airlines may determine the tariff for economy class of passengers services which shall lie within the range of the lower and upper limit tariff determined by MoT. Further, domestic scheduled commercial airlines shall announce and publish the new fares to consumers through printed and electronic media and/or at any airline ticketing counters. The announcement shall be published during 15 (fifteen) working days since the issuance of the new or amendment of upper limit tariff for economy class passenger’s services in domestic scheduled commercial airlines.

PM 20/2019 and KM 72/2019 requires the Director General of Civil Aviation as the regulator and controller to perform periodic evaluation on the tariff, namely every 3 (three) months, and/or at any moment if there are significant changes affecting the sustainability of the aircraft business entities activities. The tariff evaluation result will serve as a basis for the MoT to renew or change the existing of upper limit tariff for economy class passenger’s services in domestic scheduled commercial airlines.

As a form of enforcement of PM 20/2019 and KM 72/2019, the MoT may impose administrative sanctions to any business entity of domestic scheduled commercial airlines. The type of administrative sanctions can take different forms, among others, license suspension up to license revocation as governed in the prevailing laws and regulations related to its business activities in the air transport sector.