Skift Take

Indonesia President Joko Widodo threatened the state energy company that he would let private companies enter the market if it didn't lower fuel prices to an acceptable level. That threat seemed to have helped.

PT Pertamina, Indonesia’s state-owned energy company, reduced the price of jet fuel sold at the nation’s airports after President Joko Widodo ordered a review following complaints about high air fares blamed on soaring fuel costs.

The retailer lowered the price of fuel sold at Jakarta’s Soekarno-Hatta airport by 3 percent to 7,960 rupiah per liter (56 cents) from Saturday, the company said in a statement. The price of aviation fuel in Jakarta is about 26 percent lower than Singapore’s Changi airport, Pertamina said.

Indonesian airlines agreed to lower prices last month by as much as 60 percent in some routes in response to a backlash over a surge in ticket prices during the peak holiday season. Widodo said this week he plans to summon Pertamina executives to explain their prices, adding the government may allow private companies to enter the market if the monopoly retailer was unable to lower prices to a global level.

PT Garuda Indonesia, the national carrier, slashed airfares by 20 percent from Thursday, saying the step was meant to give wider public access to air travel. The other main airlines operating in the country are Lion Air and PT AirAsia Indonesia.

Pertamina, which sells jet fuel at 67 airports, said the latest price revision took into account average global crude oil prices and the rupiah exchange rate among other factors. The company reviews prices every two weeks and the cost for each airline would vary according to bilateral agreements, Pertamina said in the statement.

©2019 Bloomberg L.P.

This article was written by Eko Listiyorini from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to [email protected].

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Tags: airfares, fuel, garuda indonesia, indonesia

Photo credit: Indonesian President Joko Widodo ordered a review of fuel prices following complaints about high air fares blamed on soaring fuel costs. Bloomberg

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