aviation

The State-owned Airline Most Affected By The Government's Budget Austerity Measures

The budget austerity measures introduced by President Prabowo Subianto through Presidential Instruction (Inpres) Number 1 of 2025 are anticipated to have a significant impact on the aviation industry, particularly on state-owned airlines (BUMN). 

In the Inpres, Prabowo emphasizes the need for efficiency in the State Budget (APBN) and the Regional Budget (APBD), with a key initiative being the reduction of government travel by up to 50 percent. 

Bayu Sutanto, the Secretary General of the Indonesian National Air Carriers Association (INACA), has indicated that this policy will greatly affect the government market segment, which is a substantial contributor to passenger volume for state-owned airlines such as Garuda Indonesia, Citilink, and Pelita Air. 

"The government segment, especially government travel, constitutes a significant portion, around 30%-35%. This will undoubtedly have a considerable impact on state-owned airlines like Garuda and Pelita Air," Bayu stated to Kontan.co.id on Thursday, January 30.  

He noted that while the business travel sector represents only a fraction of total air travel, its effects are quite pronounced for state-owned airlines that largely rely on government segments. 

Furthermore, the budget cuts for government travel will also affect the hospitality sector, which plays a role in supporting these business trips. 

"Certainly, there will be repercussions for the number of passengers in the central and regional government segments due to the reduction in travel budgets for government employees and officials. In addition to airlines, the hotel sector will also be impacted," he concluded. 

Tag: APBN Aviation Industry INACA