GARUDA INDONESIA PROPOSES A BEHAVIOR CHANGE IN THE CASE OF ALLEGED DISCRIMINATORY PRACTICES OF UMRAH AIRLINE TICKET SALES.

Jakarta (18/9) – PT. Garuda Indonesia (Persero), Tbk (PTGI) has proposed a behavior change in the case of alleged violation of Article 19 sub-article “d” (Discriminatory Practices) committed by the said company in selling Umrah airline tickets for the routes to and from Jeddah and/or Medina. This statement was made by PTGI on September 10, 2020 in responding to the opportunity for behavior change as offered in a Panel Hearing of the Preliminary Examination of Case Number 06/KPPU-L/2019 on September 2, 2020. In its statement, PTGI basically stated its commitment to making a behavior change and subjected itself to procedures for behavior change as provided for in ICC Regulation Number 1 Year 2019 regarding Procedures for Handling Cases of Monopolistic Practices and Unfair Business Competition. Such Behavior Change Commitment will be set forth in a Behavior Change Integrity Pact signed by PTGI.

The Commission Panel presided over by Dr. M. Afif Hasbullah, S.H., M.Hum and flanked by Dinni Melanie, S.H., M.E. and Dr. Guntur Syahputra Saragih, M.S.M. as Members of the Commission Panel, in the Third Preliminary Examination Panel Hearing today, conveyed the points of commitment to be contained in the Behavior Change Integrity Pact. However, as a rule of thumb, the said points cannot be disclosed due to the confidentiality of the document. In principle, the pact basically asks PTGI not to violate competition law in the future.

This case had its origin in a report made on March 13, 2019, wherein PTGI published information on the Middle East Asia (MEA) Route airline ticket sales service which effectively came into force on March 1, 2019. The information contained therein is that business partners of the Umrah Worship Travel Operators (PPIU) can book Garuda Indonesia airline tickets for the MEA route through a consortium of strategic business partners (wholesalers) as determined by the management of Garuda Indonesia, namely PT. Smart Umrah (Kanomas Arci Wisata), PT. Maktour (Makassar Toraja Tour), and PT. NRA (Nur Rima Al-Waall Tour). The letter was later revised in order to add PT. Wahana Mitra Usaha (Wahana) as the fourth partner. Not long thereafter, PTGI entered into an agreement with PT. Aero Globe Indonesia on September 1, 2019 to sell airline tickets for the MEA route.

During the violation period, there were 307 Umrah Worship Travel Operators (PPIUs) in Indonesia, including the aforementioned five wholesalers of airline ticket sales. This behavior has driven PPIUs to have to make Umrah airline ticket reservations to the five wholesalers and resulted in the concentration of the market of the Umrah pilgrimage travels on them. This has also resulted in a lack of competitiveness for most PPIUs because most of the prospective congregations, especially in regions, have a propensity to further choose and use business transportation operated by PTGI as compared to other airlines. In light of the the component of the transportation cost which reaches 50% of the cost of the Umrah pilgrimage travel (BPIU), the concentration of services can also give rise an increase in BPIU.

The Commission Panel decided the need for the Fourth Preliminary Examination Panel Hearing by presenting PTGI in person in order to explain the points of requirements as provided for in the Behavior Change Integrity Pact, along with the proofs in the form of data and supporting documents, for the purpose of the fulfilment of the requirements. In the hearing scheduled for next week, the Commission Panel will give the opportunity to PTGI to respond to points of behavior change as conveyed by the Commission Panel.

Following such hearing, ICC will give a 60 (sixty)-day period PTGI to carry out the commitment and report the implementation thereof to ICC. ICC will supervise its implementation and failure to implement it or in the event of violation of the Pact, ICC can continue the proceedings to Further Examination, and if found guilty, PTGI can still be subject to a sanction for such violation.