Passengers flying with Garuda Indonesia will have to pay the passenger service charge (PSC), known as the airport tax, separately at the airport as the national flag carrier will remove the tax from its ticket price starting on Oct. 1.
Garuda was lauded in 2012 when it pioneered efficiency by including the airport tax in its ticket prices. After two years, however, the airline has decided to dump the procedure.
Garuda sales and marketing director Erik Meijer said the airline decided to stop the practice because it had caused the company losses of Rp 2 billion (S$4.1million) per month from uncollected payments.
According to Erik, the airline had been unable to collect the airport tax from passengers who had bought tickets for domestic routes from overseas.
He blamed the IT system between the airline and the airport operators for the failure.
"For instance, when a customer buys a Tokyo-Jakarta-Yogyakarta ticket in Japan, the system does not directly include the airport tax for the Jakarta-Yogyakarta leg," Erik told The Jakarta Post on Tuesday evening.
"Despite this system failure, we still had to transfer the airport tax, which we were unable to collect, to airport operators, which is why we kept suffering losses from the system," he continued.
Garuda's IT system had adopted the International Air Transport Association's (IATA) billing settlement plan (BSP) to include the airport tax in ticket prices. The airport operators, however, applied a different system that did not match with that of IATA.
Erik said the government should immediately force all other airlines to include the service charge in their ticket prices, so the country could get a standardized system of PSC in ticket sales. "This is not only a setback for Garuda, but a setback to the country's airline industry as a whole," Erik said.
"We will reinstate the charges back on our tickets when all other airlines do the same," he continued.
Garuda has included airport tax in its ticket prices since 2012. The system, however, led the company to suffer Rp 2 billion in losses every month. The flag carrier has now decided to separate airport tax from ticket price.
Garuda's subsidiary, low-cost carrier Citilink, however, said that it would continue to include the charges in its ticket prices, as the airline was still focused on serving domestic routes and had a less complicated system of including the PSC in its ticket prices as compared to Garuda.
According to state-owned airport operator Angkasa Pura II (AP II) corporate secretary Daryanto, AP II and Garuda signed an agreement in 2012 to include the PSC in Garuda's ticket prices, in the hope that other airlines would soon follow suit and apply the same system.
"International airports all over the world have applied the system , which is aimed at simplifying transactions for passengers," he told the Post on Wednesday.
"However, up until now unfortunately other airlines are still not ready to apply the system," he continued.
The decision made by Garuda to drop the PSC from the ticket price is contrary to the government's policy of persuading all airlines to include the PSC in their ticket prices.
The Transportation Ministry earlier this month issued a decree stipulating that airport operators should no longer collect the PSC.
According to the decree, service charges should be included in the price of tickets and the airport operators should collect the charges from airlines.
Daryanto said the airport operator would further discuss the plan with Angkasa Pura I, the Transportation Ministry, the airlines and other stakeholders in the near future.
"We hope that we can immediately apply the system so that no passengers will have to wait in line to pay the service charge at the airports," he said.