Indonesia cuts airfares to boost tourism

Indonesia will cut prices of airline tickets by 40 to 50 percent in a move to encourage tourism development amidst the coronavirus disease 2019 (COVID-19) outbreak.

Komodo Airport in Labuan Bajo, Flores, East Nusa Tenggara (Photo:
Komodo Airport in Labuan Bajo, Flores, East Nusa Tenggara (Photo:
Transportation Minister Budi Karya Sumadi said on February 26 that the Government is aiming to lure more tourists to ten destinations deemed most affected by the outbreak, namely Batam, Bali, Yogyakarta, Silangit, Malang, Labuan Bajo, Lombok, Manado, Tanjung Pandan, and Tanjung Pinang.
This programme is expected to boost domestic tourist arrivals by 25 percent and international arrivals by 10 percent. Cheaper hotel rates will make up an additional 5 percent, Budi said, adding the government hoped that the number of tourist arrivals will pick up 30-40 percent to keep tourism business activities going in those tourist attractions.
Meanwhile, Finance Minister Sri Mulyani Iindrawati said the government will spare IDR 443 billion (US$31.9 million ) from the state budget to reduce ticket fares on domestic flights by 30 percent, while three state-owned enterprises including oil and gas company Pertamina and airport operators Angkasa Pura and Airnav will offer incentives to reduce fuel and ground handling costs, the key components in determining ticket fares.
The combined incentives could reduce airfares by up to 50 percent, she said.
In addition, a budget of nearly IDR 300 billion has been allocated for a programme to lure international visitors, including IDR 98.5 billion set aside for domestic airlines and travel agencies so they can provide discounts for foreign tourists.
The Finance Ministry will also pay 33 district and municipal governments IDR 3.3 trillion to suspend hotel and restaurant taxes for six months.
The Tourism and Creative Economy Ministry will receive IDR 103 billion for promotional campaigns, IDR 25 billion for tourism events and IDR 72 billion to hire social media influencers whose main task will be to inform visitors that Indonesia is free from COVID-19.
Indonesia recorded 16.1 million international arrivals last year, up slightly by 1.8 percent from the previous year.
However, the country's reliance on Chinese visitors – who made up nearly 13 percent of the total international arrivals last year – makes it particularly vulnerable to the global tourism downturn caused by the COVID-19 outbreak.
The government has estimated that a sharp fall in Chinese arrivals may cost the country $2.8 billion in potential revenue losses this year.

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