Indonesia to Allow New Increase in Airport Tax

Palembang airport

It seems that to fund the development of airports around Indonesia, the Indonesian government plans to increase fees for airplane passenger services, it was announced at the beginning of the week by Indonesia Minister of Transportation Budi Karya Sumadi.

Indonesia Transportation Minister Budi Karya Sumadi indicated at the beginning of the week that airport taxes increase would be implemented particularly at airports under the management of state-owned airport operator PT Angkasa Pura II (AP II).

“We are discussing the airport tax increase. We will finalize [the new fees] in the near future,” Budi said after attending a meeting at the Office of the Coordinating Maritime Affairs Minister.

AP II president director Mohammad Awaluddin said the airport tax increase would be implemented in airports that had been renovated and expanded.

“We will increase the airport tax for airports because we have spent a certain amount of funds on investment,” Awaluddin said to kompas.com online publication.

However, he declined to mention the names of the airports whose taxes would increase. However, APII airports which have recently been expanded or renovated include Jakarta CGK, Bandung, Medan Kuala Namu, Palembang and Pekanbaru.

Pekanbaru airport

“It is not up to us [AP II] to make decision, but the government. We will only submit the proposal,” he said, adding that one of the considerations to increase the airport taxes was the impact on inflation.

He assured that the airport tax increase would have a positive impact on the improvement of airport services because the revenue increase received by airport operators would be reinvested for service improvement.

Awaluddin said AP II also considered applying cross subsidization between airports under its management before submitting its proposal to the government.

“The EBITDA (earning before interest, taxes, depreciation and amortization) of some airports under our management is negative because the investment and revenue is imbalanced,” he added.

(Source: bbn)