Jakarta – Early this year, the Immigration Office in Banda Aceh saw an unusual uptick in passport applications, with up to 200 being received daily, up from the usual 50.

The reason behind this was somewhat unusual, and as always, had to do with money. Most of the applicants told officers who interviewed them that they wanted to get a passport so they can fly to cities in Java via Kuala Lumpur in Malaysia, because the airfares were much cheaper.

Skyrocketing airfares on domestic flights have caused both travelers and the government grief for several months now.

On Wednesday, Luhut Pandjaitan, the Coordinating Minister of Maritime Affairs, said the government has finally come to an agreement with domestic airlines to lower ticket prices by 15 percent.

"We'll see how the market adjusts," Luhut said after a meeting with the airlines and Transportation Minister Budi Karya Sumadi.

The Acehnese might not have had to resort to their convoluted itinerary had Indonesia's two biggest airlines refrained from making a controversial business decision last year.

Flag carrier Garuda Indonesia and budget airline Lion Air maxed out their fares to the limit allowed by the government, marking an end to the cheap flight boom of the past decade and cornering their smaller rivals.

Despite calls from the government, customer groups, hotel operators and travel agents to cut ticket prices, the airlines were unmoved.

They argued they needed to make up for losses incurred in past price wars, or else they will perish under the swelling costs of fuel, plane hire, maintenance and foreign debt payment.

The government then issued two new regulations in March to enforce a higher floor price and introduce a new formulation for determining ceiling prices to prevent new price wars while giving room for the airlines to cut fares.

Despite the government intervention, Garuda and Lion still have more than doubled their ticket prices since last year.

Travelers are left with little options, as Garuda, Lion and their subsidiaries now virtually control the domestic flight market.

The impact of the airfare hike is already apparent. Hotel occupancy fell to 53 percent in March from 57 percent in the same month last year, data from the Central Statistics Agency (BPS) showed.

18.2 million Indonesians flew domestically in the first quarter, down 18 percent from 22.2 million in the same quarter last year, the data also showed.

Some economists did put the blame in falling passenger number on a lackluster economic growth in the first quarter of this year.

For the government, the current situation is less than ideal to say the least. In three weeks, Indonesia will see close to 23 million people embarking on mudik, the annual exodus for Idul Fitri, one of the largest of its kind in the world.

A further airfare hike, as airlines try to cash in on mudik, will turn passengers away from the safest mode of transport to trains, cars, motorcycles and ships, increasing risks of accidents during a massive exodus of people that regularly claims hundreds of lives every year.

It is now up to Transportation Minister Budi to come up with detailed calculations and a new regulation in less than a week to force airlines to lower their fares before mudik begins.

In the most likely scenario, the government will cut the ceiling price by 15 percent. "I will report to the Coordinating Minister for Economic Affairs on Monday. We will have a lower price ceiling by then," Budi said.

Source: https://jakartaglobe.id/context/govt-intervenes-to-prevent-mudik-airfare-hike