However the state oil and gas company Pertamina, which is in charge of distributing jet fuel and adjusts prices on a monthly basis, said airlines will have to pay in cash to fill their tanks at Indonesia's 15 main airports.

"As of June 1, 2005 Pertamina is imposing a regulation for the purchase of fuel in cash and on the spot where the plane is refueling," Pertamina said in a statement.

Rising oil prices have added pressure on local airlines, many of which are struggling to survive amid cut-throat rivalry. Budget carrier Star Air halted operations this week, blaming competition and high aviation fuel costs.