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Indonesia's Garuda airline cuts ticket prices by 20%

Indonesia's Garuda airline cuts ticket prices by 20%

Two Garuda Indonesia planes are seen at the Soekarno-Hatta airport in Tangerang near Jakarta. (File photo: AFP)

JAKARTA: Indonesia's national flag carrier Garuda has slashed ticket prices by 20 per cent, the company said on Wednesday (Feb 13), following Indonesian president Joko Widodo's request that airlines offer lower-cost fares.

The move applies to all of Garuda's routes as well as those of its low-cost subsidiaries Citilink Indonesia, Sriwijaja Air and NAM Air.

"This is in line with the aspirations of Indonesians, a number of national industry associations, and the (wishes of) the president of Indonesia, who wants a reduction in flight prices to support economic growth, especially in the tourism sector," chief executive Ari Askhara said in a statement.

Local media reported earlier in the week that Widodo had asked airlines to lower prices at the request of the hospitality industry, which hopes to boost occupancy rates.

Transport minister Budi Karya told news website Detik on Wednesday that Widodo had asked airlines to lower their prices, but had not specified what the size of the price cut should be.

"We expect the price decline to increase the number of passengers, so that overall our total income should be equal (to before the price cuts)," Garuda's Askhara told Reuters by text message.

He declined to comment on whether the price reductions had come specifically at Widodo's request.

Garuda reported a US$116.86 million net loss for the first six months of 2018, before concluding the year with a modest profit.

The airline has been battling for market share against local market leader Lion Air, which in October suffered the crash of a Boeing Co 737 MAX jet that killed all 189 people on board.

READ: Lion Air flight crashes into sea after taking off from Jakarta

Domestic air traffic has more than tripled in Indonesia over the past decade as rising prosperity and lower fares made flying affordable for more people.

With 129 million passengers in 2017, the Southeast Asian country is the world's tenth largest aviation market and is projected to continue growing.

Source: Reuters/nc