Sticker Shock at Check-In
Jennifer stared at her phone screen in disbelief. The Jakarta-based private sector employee, who travels frequently to Medan for work, had grown accustomed to booking last-minute domestic flights without breaking the bank. Last week, that routine shattered. Economy class tickets from Kualanamu International Airport in North Sumatra to Soekarno-Hatta Airport in Tangerang had jumped from roughly 1.6 million rupiah to 1.9 million rupiah (US$93 to US$111) to 2.5 million rupiah. Business class fares had ballooned to between 8 million and 14 million rupiah.
“Outside of peak season, you can usually still buy a ticket on the same day,” said Jennifer, who requested that her real name not be used as she lacks permission from her employer to speak to the media. Instead, she found herself struggling to secure any seat, forcing her return journey to be delayed by two days. Her experience mirrors a nationwide outcry as Indonesian travelers confront airfare increases of up to 50%, far exceeding the 9% to 13% range the government had projected.
The cause is a perfect storm of geopolitical conflict, currency volatility, and regulatory adjustment. On April 6, 2026, Indonesian authorities approved a dramatic increase in the fuel surcharge cap, raising it to 38% for both jet and propeller aircraft, up from 10% for jets and 25% for turboprops. The move came after jet fuel prices surged more than 70% in a single month, driven by the ongoing conflict in the Middle East and its ripple effects across global energy markets.
The Mechanics Behind the Surge
To understand why ticket prices have climbed so sharply, one must look at the complex formula governing Indonesian domestic airfares. The government sets distance-based price ceilings, or upper limits, on what airlines can charge for routes. Within this framework, airlines may add a fuel surcharge, an additional fee designed specifically to offset fluctuations in aviation turbine fuel (avtur) costs. This surcharge is not arbitrary; it is calculated using a formula determined by the Transportation Ministry.
Jet fuel typically accounts for approximately 40% of total flight operating costs. When state energy firm Pertamina raised prices for the April 1 to April 30 period, the impact was immediate and severe. At Soekarno-Hatta Airport, domestic jet fuel prices leaped from 13,656.51 rupiah per liter in March to 23,551.08 rupiah per liter in April, representing a surge of more than 72%. For international routes, the increase was even steeper, with prices jumping 80.32% to approximately $1.34 per liter.
Coordinating Minister for Economic Affairs Airlangga Hartarto announced the 38% surcharge cap on April 6, explaining that the previous differential between jet and propeller aircraft had been standardized. “Previously, the surcharge was capped at 10% for jets and 25% for propeller aircraft. Now, it has been standardized at 38%,” he said at a press conference. The Indonesian National Air Carriers Association (INACA) had initially requested a 15% increase, but the government opted for a more aggressive adjustment in response to the extraordinary pressure on airline balance sheets.
Aviation analyst Alvin Lie calculated that the surcharge increase from 10% to 38% logically translates to ticket price increases of at least 28%. Even with additional government mitigation measures, containing the final increase to the targeted 13% range proved mathematically impossible without substantial subsidies.
Policy Promises Meet Ground Reality
The government attempted to soften the blow through a package of fiscal interventions. Chief among these was a decision to cover the 11% value-added tax (VAT) on economy class tickets for two months, a subsidy known locally as PPN DTP (VAT borne by the government). This measure is valued at approximately 1.3 trillion rupiah per month in foregone revenue. Additionally, import duties on aircraft spare parts were eliminated, costing the state roughly 500 billion rupiah annually.
With these measures in place, Airlangga stated that the government expected “ticket price increases to remain within the 9% to 13% range.” Yet passengers like Jennifer are seeing increases of 50% or more. The disconnect stems from a critical delay in implementation. While the Transportation Ministry issued Ministerial Decree No. 83/2026 authorizing the 38% fuel surcharge, the Finance Ministry had yet to disburse the promised VAT subsidy when airlines began adjusting their pricing.
“So far, the only regulation in place is the 38% fuel surcharge under Ministerial Decree No. 83/2026. There are no new written regulations yet from the Finance Ministry,”
INACA secretary-general Bayu Sutanto explained this gap to reporters, noting that the missing paperwork had created a temporary vacuum where airlines applied the surcharge without the offsetting tax relief. Aviation analyst Lie elaborated that even once the 11% VAT subsidy arrives, the math remains challenging. “The only measure that directly affects consumers is the removal of the 11% VAT on tickets. If you take that off a 28% increase, you are still looking at a 17% rise,” he said.
The removal of import duties on spare parts offers longer-term relief, potentially reducing maintenance costs by around 5%, but Lie cautioned that this benefit flows first to maintenance, repair, and overhaul (MRO) providers. It could take two to three months for these savings to filter through to consumer ticket prices.
Airlines Cut Routes as Losses Mount
The financial pressure on Indonesian carriers extends beyond fuel costs. The rupiah has weakened from approximately 14,100 per US dollar in 2019 to near 17,000 in early 2026, creating a severe mismatch for airlines that incur roughly 70% of operational expenses in dollars while earning revenues primarily in local currency. National carrier Garuda Indonesia recorded a net loss of 5.4 trillion rupiah in 2025, nearly five times higher than the previous year, even before the latest fuel crisis.
Faced with these headwinds, airlines are reducing capacity. AirAsia announced it has “adjusted flight frequencies across several routes,” prioritizing operations with the strongest performance without specifying which ones. Acting President Director Achmad Sadikin framed these changes as necessary adaptations. “We understand that the aviation industry is currently facing continuously evolving dynamics. Therefore, we are implementing gradual operational adjustments as part of our efforts to ensure that operations remain healthy, adaptive, and capable of delivering optimal services to the public,” he said in a statement.
INACA’s Bayu noted that airlines may be cutting frequencies or temporarily suspending certain routes because this period through May is typically low season with softer demand. Affected passengers are being offered compensation including complimentary rescheduling within 30 days, travel credits, or refunds. Garuda Indonesia, meanwhile, is focusing on high-volume routes such as the upcoming Hajj season, deploying 15 wide-body aircraft to serve over 102,000 pilgrims starting April 21, even as it grapples with the broader financial downturn.
The situation reflects what analysts describe as a “sharing the pain” approach, where the burden is distributed among airlines, passengers, and the state. “To prevent airlines and passengers from bearing the full brunt, the government has scrapped the 11% VAT, foregoing nearly 1.5 trillion rupiah in monthly ticket revenue,” Lie explained. Coordinating Minister Airlangga acknowledged there is “no silver bullet,” noting that Indonesia is not alone in facing these challenges.
Travelers Rethink Their Options
The fare increases are reshaping travel behavior across the archipelago. Indonesian netizens have flooded social media with complaints, with some canceling or postponing trips entirely. One Threads user, Dion Haryadi, wrote on April 7 that Batam to Jakarta tickets on Batik Air had jumped from the usual 1.5 million rupiah to about 2.4 million rupiah. Others are discovering that flying abroad can now be cheaper than domestic travel.
Jennifer discovered that a Medan to Jakarta journey via Kuala Lumpur, Malaysia, was priced lower than a domestic route transiting in Padang, which cost more than 3 million rupiah. “At the time, there were no direct domestic flights to Jakarta, but I did not have my passport with me for a Kuala Lumpur transit,” she said, highlighting the absurdity of the pricing inversion.
Tourism expert Azril Azahari from Trisakti University warned that domestic destinations are becoming less price-competitive compared with overseas options. “Flying to Singapore can be cheaper than travelling to Raja Ampat, Komodo Island or even Bali,” he observed. If prices do not return to competitive levels, Indonesia’s tourism appeal could erode amid growing regional competition.
Transportation analyst Revy Petragradia from the Indonesian Transportation Society (MTI) predicted travelers will become more selective, potentially leading to a 10% to 15% drop in air passenger numbers. “Business trips may continue as usual, but economy passengers and those travelling short distances will certainly think twice. A shift in transport modes, from air to land or sea, is likely for shorter routes,” she explained.
This demand destruction comes at a particularly challenging time for airlines already hit by government austerity measures. Since late 2024, authorities have restricted official travel as part of a broader push to cut state spending. Finance Minister Purbaya Yudhi Sadewa announced last week that the government is targeting savings of between 121.2 trillion and 130.2 trillion rupiah this year, focusing on non-essential spending including official travel.
Global Forces Driving Regional Turbulence
Indonesia’s aviation crisis cannot be separated from the broader geopolitical context. The conflict in the Middle East, specifically the war involving Iran and its impact on the Strait of Hormuz, has sent shockwaves through global energy markets. Approximately one-fifth of the world’s daily oil and liquefied natural gas passes through this narrow waterway, with more than 80% destined for Asia.
Platts, part of S&P Global Energy, assessed the benchmark FOB Singapore jet fuel/kerosene outright price at $228.76 per barrel on April 6, remaining above $200 for the sixth consecutive trading session. The product’s crack spread against crude oil hovered near $100 per barrel, indicating extreme tightness in refined fuel supplies. These prices have translated into operational chaos for carriers worldwide.
Across Southeast Asia, governments have responded with varying measures. The Philippines raised its fuel surcharge to Level 8, allowing fees ranging from Philippine peso 253 to 6,208.98 depending on distance, and declared a national energy emergency. Vietnam saw more than 60% of airlines implement fare increases or fuel surcharges ranging from 5% to 20%. Thailand has imposed special fuel surcharges on specific routes, while Singapore delayed its sustainable aviation fuel levy framework by six months to manage cost pressures.
The Asian Development Bank warned that a scenario of prolonged conflict with persistent price increases until early 2027 could reduce economic growth by up to 1.3% for developing countries in the Asia-Pacific region. Willie Walsh, director of the International Air Transport Association (IATA), cautioned that even if the Middle East ceasefire holds, it will take months for jet fuel supplies and prices to normalize. “I do not think it is going to happen in weeks,” he said.
Back in Indonesia, the uncertainty surrounding how long the VAT subsidy will continue adds another layer of risk for airlines. Revy from MTI noted that this uncertainty forces carriers to make conservative assumptions about future costs. She suggested the government could bolster the sector through integrated travel packages combining flights, accommodation, and tourism activities, created in partnership with the Ministry of Tourism and Creative Economy.
The Essentials
- Indonesia raised the maximum fuel surcharge cap to 38% for all aircraft types, up from 10% for jets and 25% for turboprops previously.
- Jet fuel prices at Soekarno-Hatta Airport surged 72.45% in one month, from 13,656.51 rupiah to 23,551.08 rupiah per liter.
- Passengers report domestic airfare increases of up to 50%, far exceeding the government’s projected 9% to 13% range.
- The gap between official targets and reality stems partly from delays in disbursing promised VAT subsidies from the Finance Ministry.
- Airlines are cutting flight frequencies and suspending routes; AirAsia confirmed operational adjustments across several domestic and international routes.
- Currency pressure compounds the crisis: 70% of airline operational costs are dollar-denominated while revenues are in rupiah, which has weakened from 14,100 to near 17,000 per dollar since 2019.
- National carrier Garuda Indonesia posted a net loss of 5.4 trillion rupiah in 2025, nearly five times the previous year’s losses.
- Analysts predict a 10% to 15% drop in air passenger numbers as travelers shift to land or sea transport for shorter routes.
- The crisis reflects global pressures: jet fuel prices have surpassed $200 per barrel due to Middle East conflict and Strait of Hormuz disruptions affecting Asian supply chains.
- Government mitigation measures include absorbing 1.3 trillion rupiah monthly in VAT and eliminating 500 billion rupiah annually in aircraft spare part import duties.
