Indonesia Eases Travel Rules in Boost for Virus-Hit Airlines

(Bloomberg) --

Indonesia will allow airlines to carry more passengers in a rule that further eases curbs in the aviation industry, as Southeast Asia’s largest economy allows more cities to reopen after months of mobility restrictions.

The move by the Ministry of Transportation to scrap a rule requiring carriers to limit the seating capacity to 50% while retaining mandatory virus testing and other social distancing rules for passengers came as the country recorded the biggest daily spike in infections.

This relaxation in curbs prompted Lion Air Group, the country’s largest private carrier, to reverse a decision to indefinitely ground its planes and restart operations from Wednesday. Flag carrier PT Garuda Indonesia plans to limit its passenger load to 70% of the aircraft capacity, President Director Irfan Setiaputra said.

The easing of curbs on airlines follows move to reopen some business sectors to revive an economy ravaged by the coronavirus pandemic that’s shown signs of easing in some regions of the vast archipelago. Authorities said 136 cities and regencies can start preparations to resume normal and productive activities as the infection rate falls.

The revised rules for airlines will require passengers to take polymerase chain reaction or rapid tests before departure to ensure they are free from the virus. The cost of testing is seen as preventing a recovery in tourism and travel industry, according to Harry Su, head of equity capital markets at Samuel International.

“The mandatory Covid-19 tests are likely to dampen travelers’ appetite on top of potentially higher ticket prices,” Su wrote in a text message. Fliers will also be worried about “testing positive and how they would be handled and treated thereafter.”

Authorities reported 1,043 new infections on Tuesday, taking the total cases to 33,076 and death toll to 1,923, the most in Southeast Asia. Jakarta, which began relaxing some of its social distancing measures this week, saw 232 new cases, the biggest daily increase for the capital city.

Indonesian airlines have been hit hard by a slump in travel and a ban on domestic commercial flights to combat the virus. Garuda, which saw its passenger traffic slump 91% in April from a year ago, is betting on a credit line from the government to cope with what it calls the “extremely challenging environment for airlines.”

The carriers may see a rebound in travel when the government reopens the country to foreign tourists as early as September and to domestic holidaymakers by the end of July.

Garuda shares ended 2.1% lower after surging as much as 6.9% in intraday trading in Jakarta. They have rallied 57% this quarter.

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