KUALA LUMPUR - Indonesia has increased the jet fuel surcharge and allowed airlines to raise domestic ticket prices as global oil prices surge.

Economy Minister, Airlangga Hartarto said the surcharge will rise from 10% to 38%, while base ticket prices may increase between nine and 13%.

The move comes as oil prices rise sharply due to the ongoing conflict in the Middle East.

Low-cost carrier AirAsia X also announced fare increases and route cuts to manage rising costs linked to the conflict.

The government said it will absorb the 11% value added tax on domestic tickets to ease the burden on travellers.

“The amount of subsidy given by the government is around 1.3 trillion rupiah (about USD76 million) per month,” the minister said.

Airlangga said the measures will be reviewed after two months depending on whether the war in the Middle East continues.

Global oil prices have exceeded USD100 per barrel since strikes by the United States and Israel on Iran on February 28 triggered wider regional tensions and disrupted supply routes.

Jet fuel prices at Soekarno-Hatta International Airport have risen by more than 70% for domestic flights since March, while prices for international flights have nearly doubled.

Despite rising costs, the government said it will maintain subsidies for domestic gasoline and natural gas.

Fuel subsidies currently cover about 30 to 40% of consumer costs and form a large part of the national budget.

Indonesia had based its 2026 subsidy calculations on oil prices of around USD70 per barrel and must keep its fiscal deficit below three per cent of gross domestic product.

“With savings here and there, we can ensure that the deficit will still be around 2.9%.

“I want to emphasise that the subsidised fuel price will not be raised until the end of the year. And my budget is adequate,” Finance Minister Purbaya Yudhi Sadewa said.

The government also plans to remove import duties on aircraft spare parts to help reduce airline operating costs.

Last month, Jakarta introduced fuel rationing and work-from-home measures for civil servants to conserve energy.

Airlines across Asia and globally have also raised fuel surcharges and ticket prices as jet fuel costs continue to climb.