Source: Jakarta Globe Author: Janeman Latul 02/15/2009
Subject Concerned: Government Airlines Aviation Fuel
Local airlines and the Transportation Ministry over the weekend boosted momentum in calls for state oil company PT Pertamina to set the price of aviation turbine fuel, or avtur, in line with Singapore's avtur.
Emirsyah Satar, flag-carrier PT Garuda Indonesia's chief executive, said on Feb. 15 that airlines hoped the price here would be set on par with Singapore.
"We acknowledged that Singapore's price is slightly cheaper than Indonesia's," said Emirsyah, who is also the chairman of the Indonesia National Air Carriers Association, or INACA.
"We actually hope the current avtur will be the same as Singapore's so that we can reduce ticket fares again, which will benefit passengers as the oil price falls," he said.
Although the global crude oil price has fallen significantly since July 2008, Indonesia's avtur remains high.
According to Transportation Ministry data, Singapore's avtur, which is also used as benchmark rate by Australia, Malaysia, Thailand, Brunei Darussalam and Hong Kong SAR, was on average 28.1 percent lower than the aviation fuel sold on the domestic market in 2008.
The avtur, which is described in airline ticket fares as fuel surcharges, accounts for between 40 percent and 50 percent of the cost of flying. The ticket price itself, value-added tax and insurance account for the majority of the remainder.
Pertamina's spokesman, Anang Rizkani Noor, was not available for comment on Feb. 15.
Transportation Minister Jusman Syafi'i Djamal on Feb. 13 said that in a reply to his ministry's inquiries about the price differences, Pertamina stated that it had to maintain higher prices as Indonesia's demand for the fuel was five times lower than Singapore, and it made far less revenue as a result.
The state-owned firm told the ministry it plans to synchronize Indonesia's price with Singapore once a new refinery in Balongan, West Java Province, comes on stream in 2010, which would lower production costs, Syafi'i said.
Pertamina supplies domestic aviation fuel from its Dumai, Riau Province, refinery and fuel purchased from Singapore and Malaysia.