Indonesia Raises Jet Fuel Surcharge, Airfares Increase

The government said the jet fuel surcharge will increase from 10% to 38%, while airlines will be allowed to raise base domestic ticket prices by between 9% and 13%, within existing regulatory limits.

Measures to Offset Impact on Travellers

Economy Minister Airlangga Hartarto said the government will cover the 11% value-added tax on domestic flight tickets to reduce the impact on passengers.

The subsidy is estimated at around 1.3 trillion rupiah (approximately $76 million) per month. The measures are expected to be reviewed after two months, depending on developments in the Middle East.

Impact of Rising Oil Prices

Global crude oil prices have risen above $100 per barrel following recent developments in the Indonesia region, including military activity involving the United States, Israel, and Iran, as well as disruptions affecting the Strait of Hormuz.

In Jakarta, jet fuel prices for domestic flights have increased by more than 70% since March, according to data from state-owned energy company Pertamina. Prices for international flights have also increased significantly.

Airline and Industry Response

Airlines are adjusting operations in response to higher fuel costs. AirAsia X has indicated that it is increasing fares and reviewing routes to manage cost pressures.

The government also announced the removal of import duties on aircraft spare parts to help reduce airline operating costs.

Broader Economic Measures

Indonesia has stated that it will maintain subsidies on domestically consumed fuel, which currently cover a portion of consumers' costs and represent a significant share of the national budget.

The 2026 budget was based on an oil price assumption of $70 per barrel. Officials said efforts are being made to keep the fiscal deficit within the legal limit of 3% of GDP.

Additional measures introduced in recent weeks include fuel rationing and work-from-home arrangements for civil servants to manage energy demand.