When Will The Flight Ticket Go Down?

PT Pertamina ensures that Avtur’s price will soon be lowered following a new formula set by the government. This is expected to encourage airlines to adjust ticket sales prices. Minister of Energy and Mineral Resources (ESDM) Ignasius Johan stated that his party has issued a formula for calculating the basic price of avtur fuel oil through Ministerial Decree (Kepmen) ESDM No. 17 K / 10 / MEM / 2019.

In the ESDM ministerial decree issued on February 1, 2019, Pertamina can only set a margin limit of 10% of the base price.  The basic price formula in Avtur calculation is determined based on acquisition costs, storage costs and distribution costs, as well as margins with limits using the Mean Of Platts Singapore (MOPS) + Rp 3.581 / liter + margin (10% of the base price). As for, margin determination as Pertamina’s profit uses the formula (10/90) x (MOPS + Rp 3.581 / liter).

The plan to reduce avtur prices by Pertamina immediately formed a positive perception of investors over the increase in the share price of PT Garuda Indonesia. Data from the Indonesia Stock Exchange at the break of session I, February 13^th 2019, noted that GIAA shares rose 3.49 percent at the level of Rp 474 / share with a transaction value of Rp 26.77 billion and a volume of 56.99 million shares. In this week (Mid February), four airlines under the flag of Garuda Indonesia Group namely Garuda, Citilink, Sriwijaya Air, and NAM Air reduced ticket prices by 20% for all domestic routes.Secretary of the Indonesian aviation network, said that avtur prices did contribute greatly, which is around 35% – 40% of the airline’s operating costs. Decreasing the price of avtur will indeed affect the selling price of tickets. However, airlines cannot immediately adjust ticket prices because there are other cost components that are also worth noting. Fluctuations in the value of the US dollar exchange rate affect other operational costs components such as the value of aircraft leases to maintenance costs or aircraft parts.

References :

Bisnis Indonesia Newspaper, February 13th 2019

Bisnis Indonesia Newspaper, February 14th 2019

https://ekonomi.kompas.com/read/2019/02/13/131540926/kemenhub-harga-avtur-turun-harga-tiket-pesawat-bisa-diturunkan

https://www.cnbcindonesia.com/market/20190213122621-17-55258/harga-avtur-turun-saham-garuda-terbang-lagi

About Post Author

Triani

I received my Master’s in Civil Engineering from ITB since 2016. Before that, my undergraduate degree was also in Civil Engineering from ITB and Management from Open University. I worked as a Lab. assistant of structure at a ITB Lab. Structure for a half year during I took Master’s degree. and Then I worked as a engineer of structure in private consultant company in south Jakarta for a year. Now I run my own business in developer and distributor of polywood.

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Triani

I received my Master's in Civil Engineering from ITB since 2016. Before that, my undergraduate degree was also in Civil Engineering from ITB and Management from Open University. I worked as a Lab. assistant of structure at a ITB Lab. Structure for a half year during I took Master's degree. and Then I worked as a engineer of structure in private consultant company in south Jakarta for a year. Now I run my own business in developer and distributor of polywood.