Government holds fuel subsidies while capping airfare increases amid global jet fuel pressure
Indonesia’s government has moved to protect household spending in 2026 by keeping subsidized fuel prices unchanged, even as global energy volatility pushes aviation costs higher and domestic flight tickets become more expensive.
Subsidy Policy Holds Through 2026
The government has confirmed that subsidized fuel prices will not increase until the end of 2026. Finance Minister Purbaya Yudhi Sadewa said the subsidy remains in place to preserve purchasing power, despite pressure from global oil markets. He delivered the statement during a press conference in Jakarta on April 6, 2026, stressing that the policy is meant to keep household expenses manageable.
Purbaya added that the government has already modeled a scenario where crude oil reaches US$100 per barrel. Even under that assumption, the state budget deficit is projected to remain around 2.9 percent of gross domestic product, which is still within a controlled range. He also pointed to a fiscal reserve known as Sisa Anggaran Lebih, estimated at Rp420 trillion, as a cushion if market conditions worsen.
Why Airfares Are Still Rising
While subsidized fuel remains stable, domestic flight ticket prices are still expected to rise by 9 to 13 percent. Coordinating Minister for Economic Affairs Airlangga Hartarto said the increase is driven by avtur, the aviation fuel used by airlines, which has become significantly more expensive in the global market.
Avtur now accounts for around 40 percent of total airline operating costs, making it one of the largest cost drivers in the aviation sector. According to government data cited in the April 6 briefing, avtur prices in Indonesia reached about Rp23,551 per liter as of April 1, 2026. By comparison, prices were reported at around Rp29,518 per liter in Thailand and Rp25,326 per liter in the Philippines, showing that regional pressure on jet fuel costs is widespread.
Government Mitigation to Limit the Burden
To prevent ticket prices from climbing too sharply, the government is limiting the fuel surcharge, which is the additional fuel-related fee included in airfare. Airlangga said the surcharge was adjusted to 38 percent for both jet and propeller aircraft, based on the upper fare limits first set in 2019. This policy is intended to keep airfare increases within the 9 to 13 percent range.
The government is also introducing a tax incentive by covering the 11 percent value-added tax for scheduled domestic economy-class flights. The subsidy is estimated to cost around Rp1.3 trillion per month, or Rp2.6 trillion over two months. Officials said the measure is designed to soften the impact of rising aviation costs on travelers while giving airlines room to absorb higher fuel expenses.
Airlines Wanted a Bigger Increase
Transportation Minister Dudy Purwagandhi said airlines initially proposed a much steeper increase in the fuel surcharge, close to 50 percent. After reviewing cost components and discussing options with industry players, the government decided that 38 percent was a more balanced level.
Dudy explained that the decision was meant to support both sides of the market. Airlines need enough flexibility to maintain operations, but ticket prices also need to stay within reach for the public. The final policy reflects an effort to avoid a major shock to domestic mobility while preventing excessive financial strain on carriers.
Wider Economic Context and Policy Tradeoffs
The aviation policy is part of a broader economic balancing act. The government is trying to maintain confidence in household spending by freezing subsidized fuel prices, while also managing sectors that are more directly exposed to international energy price swings. At the same time, officials are considering removing import duties on aircraft spare parts, a move expected to reduce state revenue by around Rp500 billion but potentially improve airline efficiency.
These decisions show a coordinated approach across ministries. Fiscal support, tax incentives, and controlled surcharge adjustments are being used together to keep inflation and transport costs from rising too quickly. The goal is not to eliminate price increases entirely, but to keep them predictable and manageable for consumers.
Indonesia’s 2026 fuel and aviation policy sends a clear signal that the government is prioritizing economic stability during a period of global energy uncertainty. By keeping subsidized fuel prices unchanged and capping airfare increases, policymakers are trying to protect household budgets without undermining the aviation sector’s ability to operate sustainably. The outcome matters not only for domestic travelers, but also for cross-border movement and business activity in nearby regions. For Indonesians and Singaporeans who rely on frequent travel between the two countries, controlled transport costs remain a key factor in maintaining economic ties, tourism demand, and regional connectivity.
Sources: Kompas TV (2026) , Batamnews (2026)
Keywords: BBM Subsidy, Airfare Increase, Avtur Price, Airlangga Hartarto, Purbaya Yudhi Sadewa, Domestic Flights
