Indonesia weighs bundles and subsidies as higher fuel surcharge lifts airfares
Indonesia’s tourism authorities are working with airlines and industry players on flight subsidies and bundled travel packages as higher fuel surcharges push up domestic airfares across the archipelago.
Editor: Mursyid Sonsang
· 4 min read
Makassar, South Sulawesi — Indonesia’s Tourism Ministry is promoting bundled travel packages and supporting flight subsidies to offset the impact of higher domestic airfares on tourism, Deputy Tourism Minister Ni Luh Puspa said during a working visit to Makassar on Saturday, 19 September 2026, according to local media reports.
Ni Luh Puspa said expensive airfares have become a serious government concern because they affect public access to tourist destinations across the country, and that the Tourism Ministry is coordinating closely with the Transportation Ministry, which oversees airline ticket pricing and caps.
The deputy minister explained that the government has provided targeted subsidies during peak travel periods to help keep ticket prices within reach, including during Eid holidays, school breaks and year-end holidays.
She added that similar subsidy measures have been rolled out since 2024, continued through late 2025 and are being applied again in 2026.
Alongside these subsidies, the Tourism Ministry is encouraging tourism businesses to offer more competitive packages by bundling air tickets with accommodation and local tourism products at destinations.
Ni Luh Puspa said the ministry is working with industry associations and operators so that such bundled packages can provide more affordable options while still stimulating demand for domestic destinations.
Fuel surcharge increase and ticket prices
The current policy discussion follows a recent change in aviation charges.
The Transportation Ministry has raised the maximum fuel surcharge for domestic economy-class flights to 40 percent of the applicable upper-limit fare, up from a previous ceiling of 30 percent.
The adjustment was introduced in September 2026 in response to higher jet-fuel prices and is expected to push up average ticket prices by around 8 percent, according to business and tourism reports citing the ministry.
Officials have stressed that the 40 percent rate is a ceiling, meaning airlines may apply a lower surcharge depending on market conditions and business strategies.
Tax relief for domestic economy flights
The government has also introduced tax relief to ease the burden on passengers.
Under Ministry of Finance Regulation No. 24 of 2026, value-added tax on scheduled domestic economy-class air transport services is borne by the government, covering both the base fare and fuel surcharge components.
This measure is intended to support domestic mobility and tourism by reducing the tax element of economy-class tickets, even as operational costs rise.
Tourism performance so far in 2026
Despite cost pressures, official data show that Indonesia’s tourism sector has continued to grow in 2026.
The Tourism Ministry and Statistics Indonesia reported 8.98 million foreign tourist arrivals from January through July 2026, an increase of 5.23 percent compared with the same period a year earlier.
Analyses based on this data describe the figure as the strongest January–July performance since 2020, driven in particular by visitors from Asian and Oceanian markets.
The Tourism Ministry has also highlighted domestic travel, noting that 737.85 million domestic tourist trips were recorded over the same January–July period, up 3.34 percent year-on-year.
Authorities say these trends reflect the sector’s resilience and the importance of maintaining affordability and accessibility for both foreign visitors and Indonesians travelling within the country.
How bundling could affect travellers
The bundling concept promoted by the Tourism Ministry would package flights, accommodation and local tourism services as a single offer.
Officials and industry representatives hope that such packages can lower overall trip costs by combining components, even if the underlying airfare is not directly reduced.
Details of future packages, including which routes, destinations, airlines, hotels and tour operators will participate, have not yet been publicly specified in the reports reviewed.
For now, the initiatives outlined by Ni Luh Puspa remain in the policy-development stage, with the government and industry working to align subsidies, pricing regulation and bundled products to sustain tourism growth across Indonesia.
Sources
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