RPT-Indonesia cracks down on cheap fares to boost airline safety – Reuters

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RPT-Indonesia cracks down on cheap fares to boost airline safety – Reutersby wpjljron.RPT-Indonesia cracks down on cheap fares to boost airline safety – Reuters(Repeats to additional clients with new story name, text unchanged) By Wilda Asmarini and Gayatri Suroyo JAKARTA Jan 8 (Reuters) – Indonesia’s transport ministry has cracked down on the sale of cheap tickets for domestic flights to ensure airlines do not cut corners on safety, authorities said on Thursday, just over a week after an […]

(Repeats to additional clients with new story name, text
unchanged)

By Wilda Asmarini and Gayatri Suroyo

JAKARTA Jan 8 (Reuters) – Indonesia’s transport ministry
has cracked down on the sale of cheap tickets for domestic
flights to ensure airlines do not cut corners on safety,
authorities said on Thursday, just over a week after an AirAsia
flight crashed into the Java Sea.

The decision to tighten the rules on bargain fares came into
effect on Dec. 30, two days after Flight QZ8501 crashed en route
from Indonesia’s second-biggest city of Surabaya to Singapore.
There were no survivors among the 162 people on board.

The transport ministry has raised the ticket price floor for
economy class domestic flights, according to ministry documents
seen by Reuters.

The ministry hopes the new rule will help airlines increase
their profit margins so they can spend more on safety.

“We want the aviation sector to be healthy, not cheap. If
it’s cheap, there are many things that might not be done,”
Indonesian Transport Minister Ignasius Jonan told reporters on
Thursday.

Airlines have to strike a balance between ensuring the
safety of passengers and operational costs, Mohammad Alwi, an
official at the transport ministry, told a news conference in
Jakarta.

Indonesia has one of the world’s fastest growth rates in
commercial aviation, but its safety record is patchy. In 2007
the European Commission banned all Indonesia-based airlines from
flying to the European Union following a series of accidents.

Exemptions to that ban have since been granted to some
carriers, including Garuda Indonesia and AirAsia.

Since the Indonesia AirAsia crash, the transport ministry
has reassigned some officials and tightened rules on pre-flight
procedures.

Alwi said the rule change on ticket pricing had “no
connection with the accident” and that authorities had taken the
decision to raise the floor on price sometime earlier.

The new rule will affect Indonesian airlines such as Lion
Air, Indonesia AirAsia and Garuda, but several airline
executives contacted by Reuters on Thursday said they were not
too worried.

“In fact it means that we will not be attacked by
competitors that have predatory pricing. It’s still far from
Garuda’s average price,” said Arif Wibowo, Garuda’s chief
executive.

The regulation is unlikely to hurt Sriwijaya Air’s sales as
the carrier does not sell tickets at bargain prices, Agus
Soedjono, senior manager for corporate communication at
Sriwijaya Air, told Reuters.

“We will follow the regulator’s policy … but don’t assume
that cheap tickets mean we don’t pay attention to safety,”
Soedjono said.

An Indonesia AirAsia spokeswoman declined to comment.

Under the new rule, airlines will only be able to sell
tickets as much as 40 percent cheaper than the ceiling price set
by the ministry. Previously, the price floor was 30 percent,
although the ministry could grant some exemptions.

(Additional reporting by Cindy Silviana in Jakarta and
Fransiska Nangoy in Surabaya; Writing by Eveline Danubrata;
Editing by Jeremy Laurence)

Source Article from http://in.reuters.com/article/2015/01/08/indonesia-airlines-regulations-idINL3N0UN3FV20150108

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