British Energy Firm BP Enters Indonesia’s Avtur Market

Mar 2019

PT AKR Corporindo, Indonesia’s logistics and supply chain company operating in fuel and basic chemical distribution, has entered a joint venture with British Energy Firm BP to be a new player in Indonesia’s avtur or jet fuel market. This step was taken to curb the recent price increase of jet fuel in the market, with President Joko Widodo hinting the possibility of opening the market to private companies.

Currently, Pertamina, the state-owned oil and gas holding company, is the only supplier of jet fuel to Soekarno-Hatta International Airport. Their monopoly has received negative response from domestic airlines, such as PT Garuda Indonesia, Lion Air and PT AirAsia Indonesia, as the recent price increase from Pertamina had given them no choice but to pass it on to customers.

Backlash over the price hike has prompted the president to order a review on domestic jet fuel prices. In response, Pertamina has lowered avtur price by 3% to 56 cents per liter. The airlines have followed through by reducing the price of plane tickets by as much as 60% for certain domestic routes.

(Sources: The Jakarta Post; Bloomberg)

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