The Commission for the Supervision of Business Supervision concluded its examination and issued a Decision on the violation of article 5 and 21 of the competition law, the Law n.5/1999. The violation engaged in the price fixing on fuel surcharge by thirteen aviation (airline) companies, namely PT Garuda Indonesia; PT Sriwijaya Air; PT Merpati Nusantara Airlines; PT Mandala Airlines; PT Riau Airlines; PT Travel Express Aviation Services; PT Lion Mentari Airlines; PT Wing Abadi Airlines; PT Metro Batavia; PT Kartika Airlines; PT Linus Airways; PT Trigana Air Service; and PT Indonesia AirAsia.

Finding on the price fixing

There were written agreement on the determination of fuel surcharge price on 4 May 2006 signed by the Chairperson of Indonesia Aviation Company Association (INACA), their Secretary General, and nine aviation companies (PT Mandala Airlines, PT Merpati Nusantara Airlines, PT Dirgantara Air Service, PT Sriwijaya Air, PT Pelita Air Service, PT Lion Mentari Air, PT Batavia Air, PT Indonesia Air Transport, and PT Garuda Indonesia). The agreement agreed upon the implementation of fuel surcharge from 10 May 2006 with certain amount (IDR 20,000/passenger) and impose by all flight schedule.

The agreement is officially cancelled on 30 May 2006 and thus, provides the opportunity by all aviation companies to fix their own fuel surcharge. Notwithstanding that being withdrawn, the agreement is still implemented by each aviation companies. It was found that at least nine reported parties fixed their fuel surcharge coordinately (concerted actions) within certain flight distance hour (zero to one hours, one to two hours, and two to three hours flight). The excessive fuel surcharge enjoyed by the nine reported parties since 2006 to 2009 deemed to inflict welfare loss to the consumer for IDR 5 to 13.8 trillion.

Finding on the fraud in cost determination

In determining production cost, the reported parties consider jet-fuel price movement and thus, the fraud in cost determination could be concluded.

Finding on the impact

KPPU calculated losses (harm) to the consumer by the amount of paid fuel surcharge by the consumer because of price fixing by reported parties during 2006-2009. The number calculated for IDR 5,081,739,669,158 to IDR 13,843,165,835,099.

Consideration

Considering one of the task of the Commission, the KPPU Commission Council recommended the Commission to provide advice and recommendation to the government as follows:

1. KPPU should recommend the Ministry of Transportation not to provide authority to business association or other type of organization by business to fix certain tariff or price;

2. Fines or damages, if the Decision is affirmed, shall be used to improve airport facilities and other public service to the consumer.

Decision

Based on available facts and evidences, the Commission Council decided as follows:

1. Nine reported parties (PT Garuda Indonesia, PT Sriwijaya Air, PT Merpati Nusantara Airlines, PT Mandala Airlines, PT Travel Express Aviation Service, PT Lion Mentari Airlines, PT. Wings Abadi Airlines, PT Metro Batavia, and PT Kartika Airlines) are proved to violate article 5 on price fixing;

2. Four reported parties (PT Riau Airlines, PT Linus Airways, PT Trigana Air Service, and PT Indonesia AirAsia) are not proved to violate article 5 on price fixing;

3. All reported parties are not proved to violate article 21 on fraud in cost determination;

4. Concluded the existence of consumer loss for at least IDR 5,081,739,669,158 to IDR 13,843,165,835,099 during 2006 to 2009;

5. Cease order to cancel the written and unwritten agreement amongst nine reported parties proved to violate article 5;

6. Impose fines (in total) for IDR 80 billion and damages to nine reported parties proved violate article 5 for IDR 505 billion (in total).