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Airlines Used Fuel Tax To Lift Revenue: KPPU
Irvan Tisnabudi | May 17, 2010

A plane taking off from Surabaya. The KPPU found that passengers had shelled out $1.5 billion in unwarranted surcharges. (Antara Photo) A plane taking off from Surabaya. The KPPU found that passengers had shelled out $1.5 billion in unwarranted surcharges. (Antara Photo)
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mns_ent
5:28pm May 17, 2010

Yeah. Tell me about it.

I just saw again an increase of fuel charges of the tickets I paid today, and in real life not much fluctuation recently in aircraft fuel price. I googled it.

Anybody has a better explanation why the increase?

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Nine airlines have been using fuel surcharges to boost revenue, the Business Competition Supervisory Commission said on Sunday.

This had negated the main purpose of the surcharge — to compensate for rising fuel prices

On May 4, the commission, or KPPU, ordered the airlines to pay a total of Rp 80 billion in fines and Rp 504 billion in compensation to passengers for colluding to inflate prices.

Sunday’s statement puts more heat on the airlines, including flagship carrier PT Garuda Indonesia, PT Sriwijaya Air, PT Mandala Airlines, PT Merpati Nusantara Airlines and PT Lion Mentari Airlines.

The KPPU said in the latest statement that the average level of fuel surcharges was almost the same as from 2006-09.

“The nine airlines imposed fuel surcharge even when fuel prices were decreasing or fluctuating at low prices,” commission spokesman Ahmad Junaidi told the Jakarta Globe on Sunday.

“The fuel surcharge started in 2006 because of the overwhelming rise in fuel prices then. Back then the surcharge was a fixed Rp 20,000 per ticket. But ever since, the price of fuel has been fluctuating and has reached the point where a surcharge was not needed several times, based on our investigations.”

Ahmad added that the airlines have “misused” the fuel surcharges in order to increase their revenue.

“Revenue from fuel surcharges should be received by the suppliers of fuel to compensate for increasing fuel prices, not by the airlines,” Ahmad said. “The airlines shouldn’t be receiving revenue from fuel surcharges.”

He said the airline industry had told the commission that the collusion finding would “ruin” their finances. Ahmad took exception to the argument, but did not identify who had made the remark.

According to a regulation on fuel surcharges created by the Transportation Ministry in 2002, surcharges paid by passengers should go to fuel suppliers.

The KPPU found that passengers of the nine airlines had shelled out $1.5 billion in unwarranted surcharges.

The day after the KPPU ruling earlier this month, Garuda denied any wrongdoing or collusion. The airlines can appeal the decision.

A Garuda spokesman said on May 5 the carrier never cooperated with other airlines when determining its fuel surcharge.

Garuda is set to raise $500 million through a public offering this year. Executives were unavailable for comment on Sunday.