Francisca Christy Rosana, Jakarta – Aviation observer and member of the Republic of Indonesia's Ombudsman, Alvin Lie, said the government has intervened airlines' businesses too far.
Alvin made the statement in response to the mandated ticket discounts for low cost carriers or LCC for certain flight routes, which is set at 50 percent below the maximum tariff.
"We have to see what the product is like. This is too far. [The government] even decided on the days and the hours," Alvin told Tempo on Monday, July 8.
Alvin said that ticket discounts should be left to market mechanisms, and the government's authority should be limited to regulating the top and bottom ceiling for airfares.
Alvin also said the fact that the government decided on which days the discounts are applied is inappropriate, as discounts should be left to market mechanism, which changes constantly.
On Monday, July 8, the government held a meeting with the Coordinating Ministry for Economic Affairs, the SOE Ministry, and the Transportation Ministry to discuss the discount schemes as an effort to reduce airplane ticket prices.
Also in the meeting were aviation industry actors including Lion Air, Citilink, Angkasa Pura I, Angkasa Pura II, and AirNav. The meeting agreed that budget carriers Citilink and Lion Air would provide discounted tickets three times a week.
The discounts apply for flights on Tuesdays, Thursdays, and Saturdays departing between 10:00and 14:00 WIB. For three days every week, there would be 11,626 seats sold for 50 percent off the maximum price; 3,348 from Citilink and 8,278 from Lion Group's airlines.
The policy will take effect on July 11, 2019. Once applied, the government will formulate a rule for the tariff-cut scheme.