Govt OKs ferry prices, but caps further rises

The Jakarta Post, Jakarta

In response to rising costs, the Transportation Ministry announced Wednesday that it would allow recent increases in the price of economy-class ferry tickets to stand, but would place a cap on how much higher they could go.

Under the Transportation Minister's Regulation No. KM 22/2007, which will enter into effect on July 12, the fare cap is set at about 30 percent higher than the present fare.

Transportation Minister Jusman Syafii Djamal told reporters in Jakarta that the price cap was needed as private ferry operators had already significantly increased their fares.

According to a survey by the ministry, the biggest increase in the price of an economy-class ferry ticket in the year to date amounted to 47.37 percent, while the lowest was 21.41 percent.

Under the previous arrangements, the government determined the fares for each ferry route. Under the new regulation, however, the government will allow the private sector to determine fares within the limits set by the price cap.

In March, Indonesian National Shipowners Association (INSA) had proposed an increase in the price of ferry tickets of up to 200 percent due to increased costs.

Jusman explained that in drawing up the new regulation, the ministry had taken into account trends in a number of variables over the past five years.

A ministry survey showed there had been a 278.8 percent increase in vessel operating costs over the five-year period.

Crucially, the price of high-speed diesel had increased by 175 percent from Rp 1,586 per liter to Rp 4,362 per liter.

Load factor was another issue that affected pricing. The minister reported that there had been a drop of 40 percent in the average number of passengers using ferry services, rather than the expected 10 percent, due to increasing competition from low-cost airlines.

For example, the Central Statistics Agency (BPS) reported that Makassar, one of the busiest sea ports the country, only recorded 28,690 passengers in March, 12 percent lower than the 32,830 recorded in February.

Based on its experience in previous years, the BPS said the number of ferry and boat passengers normally peaked in June and July.