The transport cost per passenger rises from 1,933 VND per km in 2015 to 2,345 VND per km in the first three months of this year (Photo: nld.com.vn) Hanoi (VNS/VNA) - Increasing ceiling rates for airfares would bring moreopportunities for local aviation firms to have flexible and suitable pricepolicies in the domestic aviation market.
Domestic aviation firms made the statement after the Civil AviationAuthority of Vietnam (CAAV) proposed the Ministry of Transport temporarilyhalt the adjustment of ceiling rates for airfares, whichwas submitted to the ministry in March.
This change is likely to push domestic airfares up, according to the CAAV.
The authority said in the context of COVID-19 pandemic, stabilising prices toreduce socio-economic impacts is necessary. At present, passenger volume,seat occupancy and airlines' revenues have plummeted due to the pandemic.
Vietnam Airlines deputy general director Le Hong Ha said that according to thisproposal on adjusting airfares in March, the ceiling rate of airfares forroutes with a distance of less than 500km will be unchanged. While, the ceilingrates for routes with a distance from 500km will increase. Those areexpected to not affect the consumer price index (CPI) this year.
In addition, Ha said the ceiling price mechanism needs to be abolished tohelp local aviation firms gain revenue in the short-term.
“This will help Vietnam Airlines and other local aviation firms have flexibleairfare policies and improve quality of services for customers,” Ha toldthe Voice of Vietnam (VOV).
“That will also help them have more cheap rates."
An expert in the aviation industry said increasing the ceiling rates forairfares does not mean higher airfares. The increase of ceiling rates wouldcreate good conditions for the airlines to improve quality of services forpassengers, especially those willing to pay high prices.
At the same time, the aviation companies will have chances to build more ratesof air ticket prices and more stimulus programmes with suitable airfares, theexpert said.
Aviation expert Nguyen Thieu Tong said now the State should not permit aviationcompanies to set their own airfares.
Vietnam has a small number of aviation companies while domestic demand isincreasing. Therefore, if the local aviation market does not have a ceilingprice mechanism, those local firms could work together to increase air ticketprices. It will create disadvantages for passengers, Tong said.
When the domestic aviation market has a healthy and transparent competitiveenvironment, the State could remove this ceiling price mechanism for airtickets, he said.
CAAV director Dinh Viet Thang said now this market still needs the State tomanage air ticket prices. The State management could be removed when theaviation market has a healthy competitive environment and the State would onlyintervene in the local aviation market when this market faces a crisis.
The Ministry of Transport has requested the CAAV to review those issues andreport to the ministry before May 31.
According to Vietnam Airlines, the transport cost per passenger was 1,933 VNDper km in 2015. The cost rose to 2,027 VND per km in 2018 and 2,345 VND per kmin the first three months of this year. It is expected to increase to 12,925 VNDper km by year-end.
Fluctuations in input costs of the aviation industry from 2019 have made theCAAV propose the increase of ceiling rates for airfares in March. Specifically,in February, the jet fuel A1 price in Asia was 65.27 USD per barrel, up by11.36 percent compared to August 2015. Environment protection tax increased by200 percent compared to that in August 2015.
According to the proposal, the ceiling price for routes for socio-economicdevelopment and other routes less than 500km are unchanged at 1.6 million VNDand 1.7 million VND per one way ticket, respectively.
Maximum ticket price for the routes of 500km to under 850km increases by 2.27percent from 2.2 million VND to 2.25 million VND per one way ticket.
Meanwhile, the routes of 850km to under 1,000km have maximum ticket price of 2.89million VND per one way ticket, an increase of 3.58 percent from 2.79 millionVND.
Routes with a distance of 1,000km to under 1,280km have a maximum fare of 3.4million VND per one way ticket, a surge of 6.25 percent from 3.2 million VND.
For flights with a distance of 1,280km upward, the maximum ticket price is 4million VND, 6.67 percent higher than the current rate of 3.75 million VND perone way ticket./.
Domestic aviation firms made the statement after the Civil AviationAuthority of Vietnam (CAAV) proposed the Ministry of Transport temporarilyhalt the adjustment of ceiling rates for airfares, whichwas submitted to the ministry in March.
This change is likely to push domestic airfares up, according to the CAAV.
The authority said in the context of COVID-19 pandemic, stabilising prices toreduce socio-economic impacts is necessary. At present, passenger volume,seat occupancy and airlines' revenues have plummeted due to the pandemic.
Vietnam Airlines deputy general director Le Hong Ha said that according to thisproposal on adjusting airfares in March, the ceiling rate of airfares forroutes with a distance of less than 500km will be unchanged. While, the ceilingrates for routes with a distance from 500km will increase. Those areexpected to not affect the consumer price index (CPI) this year.
In addition, Ha said the ceiling price mechanism needs to be abolished tohelp local aviation firms gain revenue in the short-term.
“This will help Vietnam Airlines and other local aviation firms have flexibleairfare policies and improve quality of services for customers,” Ha toldthe Voice of Vietnam (VOV).
“That will also help them have more cheap rates."
An expert in the aviation industry said increasing the ceiling rates forairfares does not mean higher airfares. The increase of ceiling rates wouldcreate good conditions for the airlines to improve quality of services forpassengers, especially those willing to pay high prices.
At the same time, the aviation companies will have chances to build more ratesof air ticket prices and more stimulus programmes with suitable airfares, theexpert said.
Aviation expert Nguyen Thieu Tong said now the State should not permit aviationcompanies to set their own airfares.
Vietnam has a small number of aviation companies while domestic demand isincreasing. Therefore, if the local aviation market does not have a ceilingprice mechanism, those local firms could work together to increase air ticketprices. It will create disadvantages for passengers, Tong said.
When the domestic aviation market has a healthy and transparent competitiveenvironment, the State could remove this ceiling price mechanism for airtickets, he said.
CAAV director Dinh Viet Thang said now this market still needs the State tomanage air ticket prices. The State management could be removed when theaviation market has a healthy competitive environment and the State would onlyintervene in the local aviation market when this market faces a crisis.
The Ministry of Transport has requested the CAAV to review those issues andreport to the ministry before May 31.
According to Vietnam Airlines, the transport cost per passenger was 1,933 VNDper km in 2015. The cost rose to 2,027 VND per km in 2018 and 2,345 VND per kmin the first three months of this year. It is expected to increase to 12,925 VNDper km by year-end.
Fluctuations in input costs of the aviation industry from 2019 have made theCAAV propose the increase of ceiling rates for airfares in March. Specifically,in February, the jet fuel A1 price in Asia was 65.27 USD per barrel, up by11.36 percent compared to August 2015. Environment protection tax increased by200 percent compared to that in August 2015.
According to the proposal, the ceiling price for routes for socio-economicdevelopment and other routes less than 500km are unchanged at 1.6 million VNDand 1.7 million VND per one way ticket, respectively.
Maximum ticket price for the routes of 500km to under 850km increases by 2.27percent from 2.2 million VND to 2.25 million VND per one way ticket.
Meanwhile, the routes of 850km to under 1,000km have maximum ticket price of 2.89million VND per one way ticket, an increase of 3.58 percent from 2.79 millionVND.
Routes with a distance of 1,000km to under 1,280km have a maximum fare of 3.4million VND per one way ticket, a surge of 6.25 percent from 3.2 million VND.
For flights with a distance of 1,280km upward, the maximum ticket price is 4million VND, 6.67 percent higher than the current rate of 3.75 million VND perone way ticket./.
VNA
