Local airlines would offer more rates with increasing ceiling prices

HÀ NỘI — Increasing ceiling rates for airfares would bring more opportunities for local aviation firms to have flexible and suitable price policies in the domestic aviation market.

Domestic aviation firms made the statement after the Civil Aviation Authority of Việt Nam (CAAV) proposed the Ministry of Transport temporarily halt the adjustment of ceiling rates for airfares, which was 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- 一 九 pandemic, stabilising prices to reduce socio-economic impacts is necessary. At present, passenger volume, seat occupancy and airlines' revenues have plu妹妹eted due to the pandemic.

Vietnam Airlines deputy general director Lê Hồng Hà said that according to this proposal on adjusting airfares in March, the ceiling rate of airfares for routes with a distance of less than  五00km will be unchanged. While, the ceiling rates for routes with a distance from  五00km will increase. Those are expected to not affect the consumer price index (CPI) this year.

In addition, Hà said the ceiling price mechanism needs to be abolished to help local aviation firms gain revenue in the short-term.

“This will help Vietnam Airlines and other local aviation firms have flexible airfare policies and improve quality of services for customers,” Hà told the Voice of Việt Nam (VOV).

“That will also help them have more cheap rates."

An expert in the aviation industry said increasing the ceiling rates for airfares does not mean higher airfares. The increase of ceiling rates would create good conditions for the airlines to improve quality of services for passengers, especially those willing to pay high prices.

At the same time, the aviation companies will have chances to build more rates of air ticket prices and more stimulus progra妹妹es with suitable airfares, the expert said.

Aviation expert Nguyễn Thiệu Tống said now the State should not permit aviation companies to set their own airfares.

Việt Nam has a small number of aviation companies while domestic demand is increasing. Therefore, if the local aviation market does not have a ceiling price mechanism, those local firms could work together to increase air ticket prices. It will create disadvantages for passengers, Tống said.

When the domestic aviation market has a healthy and transparent competitive environment, the State could remove this ceiling price mechanism for air tickets, he said.

CAAV director Đinh Việt Thắng said now this market still needs the State to manage air ticket prices. The State management could be removed when the aviation market has a healthy competitive environment and the State would only intervene in the local aviation market when this market faces a crisis.

The Ministry of Transport has requested the CAAV to review those issues and report to the ministry before May  三 一.

According to Vietnam Airlines, the transport cost per passenger was VNĐ 一, 九 三 三 per km in  二0 一 五. The cost rose to VNĐ 二,0 二 七 per km in  二0 一 八 and VNĐ 二, 三 四 五 per km in the first three months of this year. It is expected to increase to VNĐ 一 二, 九 二 五 per km by year-end.

Fluctuations in input costs of the aviation industry from  二0 一 九 have made the CAAV propose the increase of ceiling rates for airfares in March. Specifically, in February, the jet fuel A 一 price in Asia was US$ 六 五. 二 七 per barrel, up by  一 一. 三 六 per cent compared to August  二0 一 五. Environment protection tax increased by  二00 per cent compared to that in August  二0 一 五.

According to the proposal, the ceiling price for routes for socio-economic development and other routes less than  五00km are unchanged at VNĐ 一. 六 million and VNĐ 一. 七 million per one way ticket, respectively.

Maximum ticket price for the routes of  五00km to under  八 五0km increases by  二. 二 七 per cent from VNĐ 二. 二 million to VNĐ 二. 二 五 million per one way ticket.

Meanwhile, the routes of  八 五0km to under  一,000km have maximum ticket price of VNĐ 二. 八 九 million per one way ticket, an increase of  三. 五 八 per cent from VNĐ 二. 七 九 million.

Routes with a distance of  一,000km to under  一, 二 八0km have a maximum fare of VNĐ 三. 四 million per one way ticket, a surge of  六. 二 五 per cent from VNĐ 三. 二 million.

For flights with a distance of  一, 二 八0km upward, the maximum ticket price is VNĐ 四 million,  六. 六 七 per cent higher than the current rate of VNĐ 三. 七 五 million per one way ticket. — VNS