Garuda Indonesia has slashed its fares by 20% following pressure from Indonesian president Joko Widodo who believes lower airfares will attract more tourists to the country.

Occupancy rates at hotels across the country have reportedly been falling with hoteliers in Lombok saying occupancy has dropped about 30% (no doubt a result of the natural disasters that have hit the island in recent times).

Garuda cut prices on all domestic routes for the mainline airline as well as subsidiary Citilink Indonesia and partner Sriwijaya Air.

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“This is in line with the aspirations of Indonesians, a number of national industry associations, and the president of Indonesia, who wants a reduction in flight prices to support economic growth, especially in the tourism sector.”

Garuda’s Chief Executive Ari Askhara

In a comment made to Reuters, Ari Askhara said he didn’t expect the price cut to affect the airline’s income because it would help to increase the number of passengers.

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Despite this, Garuda shares fell 2.7% when the news broke.

Therewwas also wider concern across the industry that pressure to cut prices could compromise airline safety among Indonesian Airlines that already have a record of crashes and poor maintenance.

What do you think of the price drop pressure from the Government?