Indonesia's competition regulator (Komisi Pengawas Persaingan Usaha - KPPU) is calling in seven locally-based airlines for discussions amid an investigation into rising ticket prices and suggestions of collusion.

Indonesia's Tempo outlet names the carriers as Garuda Indonesia, Citilink, Sriwijaya Air, NAM Air, Batik Air, Lion Air, and Wings Air (Indonesia). ch-aviation does not suggest any of these carriers have engaged in misconduct, merely that a KPPU investigation is underway. The government agency enforces competition law in Indonesia, including investigating possible breaches.

The increase in air fares across Ramadam and ahead of the Hajj season is generating headlines in Indonesia. The KPPU is interested in the number of tickets the carriers are allocating into different fare buckets and whether they are decreasing the number of tickets allocated into the lower-priced buckets and directing more into the higher-priced ones. The KPPU is also looking at whether there is/was an agreement among the carriers to do this in concert.

"The KPPU has scheduled summonses for seven airlines and the government to gather information regarding the ongoing increase in airplane ticket prices," KPPU member Gopprera Panggabean told Jakarta-based media last week. "Agreements made by airlines do not always take the form of tariffs or through fixing ticket prices."

"(The) KPPU will assess whether the increase in ticket prices is due to an increase in demand, an increase in jet fuel prices, changes in the rupiah exchange rate, or the prices of other cost components that cause changes in the total operating costs of airlines or due to alleged anti-competitive behaviour by airline companies."

Gopprera said changing the amount of tickets allocated to specific fare buckets may be violations of Articles 5 and 11 of Law Number 5 (1999). This law deals with unfair business practices.

Both the Lion Air Group and Garuda Indonesia Group have publicly refuted claims of anti-competitive behaviour. Lion Air's co-founder, Rusdi Kirana, last week said fares had remained consistent since the low season. "There are limits (on fares) set by the Transportation Ministry," he said. "As long as we stay within those limits, we're not violating any rules. If there are misunderstandings, we're open to correction." The Lion Air Group operates Lion Air, Batik Air, and Wings Air.

The Garuda Group operates Garuda Indonesia Airlines and Citilink. Last week, CEO Irfan Setiaputra said he was happy to talk to the PKKU. "We determine ticket prices according to government regulations," he said.

In 2020, the PKKU found all seven airlines had engaged in ticketing behaviour throughout 2019 that "hurt consumers." However, the agency did not find the carriers had acted as a cartel. Instead, it said they had responded to the ticketing practices of competitors in a form of informal "parallelism."

Last week, Gopprera did not say the carriers had engaged in a repeat of their 2019 practices, only that it was a possibility. "The KPPU will be very careful in assessing the causes of the current increase in ticket rates," he said.