PT. KAI’s Strategy as A Monopoly Company in Managing High Mobility
written by: Rizkha Nafanda Wulandari
PT. Kereta Api Indonesia (KAI Persero) is a state-owned enterprise (BUMN) and operates within a monopoly market structure in Indonesia’s transportation industry. A monopoly market is a situation where a single company dominates a portion or the entirety of a market. Several factors lead to the existence of monopolies in Indonesia, including government-issued licenses granting exclusive rights, control over certain resources, patent rights, lack of close substitute goods or services, and sometimes natural monopolies due to economies of scale. In Indonesia, monopolies are regulated under Article 17 of Law Number 5 of 1999. This law does not prohibit monopoly market structures but rather monopolistic practices. Referring to Article 51 of the same law, which states that “Monopolies and/or concentration of activities related to the production and/or marketing of goods and/or services that control the livelihoods of the people and important sectors of production for the country are regulated by law and conducted by state-owned enterprises and/or agencies appointed by the government,” PT KAI is exempted from the category of prohibited monopolies as long as it remains the sole provider of railway services in Indonesia and is not proven to engage in monopolistic practices. This is in line with Islamic principles, which allow various market structures whether perfect competition, natural monopoly, oligopoly, or others as long as they do not involve monopolistic behavior or ikhtikar (hoarding to exploit prices).
As the only company granted the right by the government to provide railway services, PT KAI has shown its commitment to continuously innovating and improving service quality. Currently, PT KAI has seven subsidiaries: PT Reska Multi Usaha (2003), PT Railink (2006), PT Kereta Api Indonesia Commuter Jabodetabek (2008), PT Kereta Api Pariwisata (2009), PT Kereta Api Logistik (2009), PT Kereta Api Properti Manajemen (2009), and PT Pilar Sinergi BUMN Indonesia (2015). The expansion of KAI’s business has been met with public enthusiasm. Moreover, public trust in KAI Group’s services has grown year by year. According to Kompas.com, from January 1 to September 30, 2024, KAI Group successfully served 338,147,389 passengers, indicating that railways have become one of the preferred modes of transportation.
People choose trains over other modes of public transport for various reasons, such as affordable fares, comfortable travel facilities, onboard security personnel, punctual departures and arrivals, user-friendly digital access, and the hospitality of the staff. Due to the high public preference for trains, passengers often complain about difficulties in obtaining tickets—whether for daily short-distance commutes or long-distance travel—especially during high-mobility periods such as elections, Eid al-Fitr, regional elections (Pilkada), and the Christmas and New Year holidays.
To respond to increased travel volume during these periods, PT KAI, with its responsive, effective, and inclusive transportation management, implements various policies such as additional services during Eid, special fares (TARSUS) during Pilkada, and increased capacity during the Christmas and New Year (Nataru) holidays. These efforts are aimed at balancing the rise in demand with service quality.
Eid al-Fitr is one of the highest-mobility moments in Indonesia. KAI routinely increases train services through additional regular trains and special trains (KLB). According to Media Indonesia, for Eid 2024, PT KAI provided 6,826 train units, a 33% increase from the 2023 Eid operations. Additionally, KAI has enhanced its digital services through the KAI Access app to facilitate real-time ticket purchases. This strategy reduces station queues while boosting operational efficiency. Capacity optimization helps mitigate the risk of excess demand, which could otherwise lead to consumer dissatisfaction.
During the 2024 regional elections (Pilkada), KAI introduced a special fare policy for go-show ticket purchases on selected routes. This initiative aims to encourage public participation in the democratic process by providing more affordable transportation options. For example, KAI is currently offering discounts of up to 50% on routes leading to voting areas. This policy increases demand elasticity and ensures more people can access train services. However, the effectiveness of this policy is often limited by fixed train capacity, preventing some passengers from benefitting from the special fares due to limited seats.
The Christmas and New Year (Nataru) holiday is also a crucial period for PT KAI. To anticipate the surge in passengers, KAI often adds more trains and extends operational hours. According to Kompas.com, during the Christmas 2023 and New Year 2024 period, KAI recorded a 27% increase in passenger volume compared to the previous year’s Nataru. From December 21, 2023, to January 7, 2024, KAI served 3,505,787 passengers with 6,522 train units. During this period, KAI often offers ticket promotions to encourage the public to use trains instead of private vehicles. This not only reduces traffic congestion but also supports energy efficiency and environmental sustainability.
PT KAI operates as a natural monopoly, meaning the market structure arises due to high investment and production costs, making it necessary to produce on a large scale to lower prices. As a result, it becomes difficult for new firms to enter and offer similar services. As a natural monopoly, PT KAI has full control over rail services in Indonesia. This position allows KAI to set prices and manage capacity without direct competitors. KAI achieves producer surplus through increased capacity and trip volumes, generating higher revenue without significantly increasing costs. On the other hand, PT KAI also strives to increase consumer surplus by offering affordable fares, especially through special rates and discounts during strategic moments. These promotions provide direct economic benefits to passengers who pay less than the perceived value of their journey. This capacity and pricing strategy ensures a balance between corporate profitability and customer satisfaction.
References
- https://www.hukumonline.com/klinik/a/apakah-monopoli-pasar-oleh-pt-kai-melanggar-huku
m-lt6225e8cccb200/ - https://www.kompas.com/properti/read/2024/10/09/183000021/hingga-30-september-kai-gro
up-layani-338-14-juta-penumpang - https://money.kompas.com/read/2024/01/08/105247726/penumpang-kai-meningkat-27-perse
n-selama-nataru-2023-2024?page=all - https://mediaindonesia.com/nusantara/665463/melonjak-penumpang-kai-tembus-33-juta-sela
ma-angkutan-lebaran-2024 - https://www.detik.com/edu/detikpedia/d-6848165/jalur-kereta-api-pertama-di-indonesia-ada
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