Jakarta. Indonesia’s move to raise aviation fuel surcharges by 38% is falling short of easing mounting cost pressures on airlines, as global oil prices spike and rupiah weakness continue to squeeze the industry.

Indonesia AirAsia said the adjustment, while helpful, has yet to fully offset surging operational costs driven by higher jet fuel prices and broader geopolitical tensions in the Middle East.

Acting President Director Capt. Achmad Sadikin welcomed the government’s measures, calling them a step toward maintaining industry balance. “The fuel surcharge adjustment and import duty exemption for aircraft spare parts are strategic measures that give airlines room to sustain operations,” he said in a statement.

The government has also introduced a value-added tax (VAT) subsidy, locally known as PPN DTP, covering the 11% levy on domestic economy-class tickets, in a bid to keep air travel affordable. However, Sadikin stressed that cost pressures remain significant.

“Although the fuel surcharge adjustment of around 38% has been calculated as part of mitigation efforts, it has not fully compensated for the existing cost pressures,” he said.

As a result, AirAsia is gradually adjusting capacity and operations, particularly on lower-margin routes, to maintain service sustainability and operational stability. The airline has also revised flight schedules on several domestic and international routes in recent days, citing ongoing operational challenges.

To address passenger disruptions, AirAsia is offering service recovery options, including free rescheduling within 30 days, credit accounts, or full refunds.

The Indonesian National Air Carriers Association (INACA) echoed similar concerns, noting that the policy response comes amid extraordinary global cost pressures.

“We appreciate the government’s policy, as it is not easy to respond to the sharp increase in jet fuel prices due to geopolitical tensions in the Middle East,” said INACA Chairman Denon Prawiraatmadja.

The government’s package includes:

• A uniform 38% fuel surcharge for both jet and propeller aircraft
• VAT borne by the government (11%) for domestic economy tickets
• Zero import duty on aircraft spare parts

These measures will be in place for two months, while authorities also delay any increase in the upper limit of airfares.

INACA expects swift implementation to support airline operations and maintain connectivity across the archipelago.

Currency Pressure Adds to Burden
Beyond fuel costs, airlines are also grappling with currency pressures, as most operational expenses are dollar-denominated while revenues are largely in rupiah.

“Airlines’ operational costs are 70% in US dollars, while national carriers earn revenue in rupiah, so a stronger dollar will further burden airline finances,” INACA Secretary General Bayu Sutanto said.

With the rupiah weakening from around Rp 14,100 per dollar in 2019 to near Rp 17,000 in early 2026, the financial strain has intensified.

Chief Economic Affairs Minister Airlangga Hartarto said jet fuel accounts for roughly 40% of airline operating costs, making price adjustments unavoidable.

Still, the government aims to limit airfare increases to around 9%–13% through subsidies and policy interventions.

Transportation Minister Dudy Purwagandhi said the surcharge adjustment was carefully calibrated. “This policy is designed to balance the sustainability of the aviation industry with the need to protect public purchasing power,” he said.

He added that the decision was made in coordination with airlines, particularly those operating domestic routes.

A Global Trend
Globally, airlines have implemented fuel surcharges ranging from 5% to 70% in response to rising energy costs. Carriers across Asia, Africa, and Australia have already adjusted fares, reflecting what industry players describe as an unavoidable global trend.

In Indonesia, authorities insist the approach remains measured, seeking to cushion both airlines and passengers as external pressures continue to build.

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