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Air fares set to soar ahead of Vietnam's Tet Festival

Publication Date : 15-10-2012


Air travel during the Tet holiday, or Lunar New Year, will become more expensive as of today, when domestic airlines go ahead with a planned price hike.

A representative of the Civil Aviation Administration of Vietnam confirmed to the newspaper Nguoi Lao Dong (Labourer) that it had received the proposal of airfare increases from carriers Vietnam Airlines, Air Mekong and VietJet Air.

The highest jump from Vietnam Airlines is 50,000 dong (US$2.40) per trip, while its Hanoi – Ho Chi Minh City one-way ticket will rise by 20,000 dong to 2.67 million dong, not including 10 per cent VAT (value-added tax) and the 44,000 dong airport fee.

Previously, Jetstar Pacific also increased its prices by about 60,000 dong per one-way ticket.

Both Air Mekong and VietjetAir have also sent outline proposals to hike their airfares by 3-4 per cent.

Nguyen Anh Tuan, deputy head of the Ministry of Finance's Department of Price Management, said the price hike of 3-4 per cent remains below the regulated ceiling price and consequently the department did not reject their proposals.

Thus, airlines were allowed to automatically apply new prices after five days of submitting the proposal under the current regulation, Tuan said.

According to Decision No. 2967/QD-BTC issued in December 2011 by the Ministry of Finance, airfares are allowed to increase by a maximum of 20 per cent and the highest price for the Hanoi – Ho Chi Minh City route is capped at 3.4 million dong per one way ticket (excluding taxes and charges) and 4 million dong per one-way ticket on the longest route for Hanoi – Phu Quoc.

However, in order to protect passengers, the Civil Aviation Administration asked airlines not to increase fairs in excess of 2.72 million dong and 3.43 million dong per one-way ticket applied to the aforementioned routes.

Despite that, the administration admitted the airlines have the right to rise prices up to the ceiling level. If so, the price of return tickets for a Hanoi – Ho Chi Minh City flight with taxes will cost 7.6 million dong and Hanoi – Phu Quoc tickets will reach more than 8.8 million dong.

According to market insiders, the domestic aviation industry saw negative growth this year given the economic downturn, therefore fare increases at this time could exceed the passengers' budget, meaning airlines would likely witness a decrease in customers.

Carriers are used to raising airfares during the two high seasons of summer and Tet holiday to regulate supply and demand. However, rising fuel prices this year have seen oil at times exceeding $120 per barrel while the Ministry of Finance has not decreased its import tax could cause financial difficulty for the airlines and force them to increase travel prices.

Last year, ticket prices increased twice: firstly in April and then before Tet holiday with an increase of about 10 per cent each time.

US$1 = 20,845 Vietnamese dong


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