ANNOUNCEMENT 04 Sep 2017

On 4 September 2017, the Indonesian Minister of Transporation introduced 79/2017 on air transportation activities and air cargo subsidies.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

Indonesian Ministry of Transportation regulation 79/2017 (in Bahasa Indonesia)
http://www.peraturan.go.id/inc/view/11e7a1cae5931eea9887313532343036.html

Inception date: 04 Sep 2017 | Removal date: open ended

Production subsidy

According to article 13 of the regulation 79/2017 by the Ministry of Transportation, "(1) Commercial air transport business entities (...) conducting pioneer air transport activities shall be compensated to ensure continuity of pioneer air transport services in accordance with predetermined routes and schedules.
(2) The compensation as referred to in paragraph (1) may be in the form of:
a. provision of other routes outside the pilot route for a scheduled commercial air carrier to support pioneer air transport activities;
b. subsidized air transport operating expenses; and / or
c. subsidized fuel transportation costs."

The subsidization of the air cargo traffic refers to "Pioneer Air Transport", i.e. those commercial transport services "that serve networks and aviation routes to connect remote and underdeveloped areas or areas that have not been served by other modes of transportation and are not commercially profitable yet." (art.1(1) of the regulation). This would suggest that the before-mentioned subsidies are meant for commercial transport that is not currently profitable and would hence not impact foreign commercial interests. However, given the specific wording, the Ministry of Transportation aims to subsidise these routes in order to trigger commercially viable routes in the long run, which could then have an impact on foreign commercial interests.

The regulation came into force on 4 September 2017.

AFFECTED SECTORS

 

AFFECTED PRODUCTS

 
N/A