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            september 17, 2019

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Indonesia mulls allowing foreign carriers to fly domestic routes


The Indonesian government is considering allowing foreign carriers to fly domestic routes to boost competitiveness and push down airfares. reports New Jersey's AINonline.
Indonesian law now requires foreign carriers to set up a local joint venture company and sets an ownership cap of 49 per cent.
The move furthers government efforts to shake up Indonesia's domestic market, now dominated by two large airline groups - flag carrier Garuda Indonesia and low-cost carrier Lion Air.
Combined, the two operators control eight Indonesian airlines, accounting for 95 per cent of the domestic market. Asia's largest budget carrier, AirAsia, remains the only foreign operator with an Indonesian unit.
The proposal, submitted by newly re-elected President Joko Widodo, marks the latest in a string of state measures aimed at boosting competition and changing airfare floors and ceilings.
In late May, Indonesia's Ministry of Transportation lowered the ceiling prices for domestic airfares by 12 to 16 per cent to stimulate tourism ahead of the Muslim holiday of Idul Fitri.
The Indonesian Hotels and Restaurants Association welcomed the decision, claiming high airline ticket prices caused a 30 to 40 per cent drop in occupancy rates.
The transport ministry now urges domestic airlines to revise ticket pricing as it examines the proposed "open skies" policy for foreign operators.

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