Vietnam's transport ministry rejects airfare floor price proposal

By Doan Loan   April 7, 2017 | 07:15 pm GMT+7
Vietnam's transport ministry rejects airfare floor price proposal
A security guard cycles near an Airbus aircraft at Noi Bai International Airport in Hanoi. Photo by Reuters

The ministry has decided to keep the floor price at zero.

Vietnam will not set a floor price for air tickets despite proposals by national flag carrier Vietnam Airlines and its subsidiary Jetstar Pacific, a government minister has said.

“If airlines are able to lower their prices, why should we stop them?" Transport Minister Truong Quang Nghia said at a meeting Friday. "Our job is to make sure price cuts and promotions adhere to the law,” he told a ministry meeting.

Regulations on air tickets will remain unchanged, and no floor price will be set. The ceiling price may be adjusted from time to time.

Last month, Vietnam Airlines suggested a floor price for domestic air fares of between VND1.54 million and VND4.2 million ($68-$185). Jetstar Pacific, one of Vietnam's two budget airlines, proposed the floor be set at between VND600,000 and VND1.2 million.

But VietJet Air, the country's only private airliner, said setting a price floor is not a common rule worldwide and is against Vietnam’s competition law.

Vietnam Airlines has been offering air fares starting from VND800,000, but cited a drop of nearly 20 percent in average spending per passenger as well as higher fuel prices and foreign exchange rates as reasons to introduce a floor price.

Vietnam’s aviation market has potential for expansion after annual growth of 29 percent in 2016, with passengers reaching 52.2 million, based on data of the Civil Aviation Authority of Vietnam. 

Cashing in on low fuel prices and budget airlines, the new Vietnamese middle class are flying in ever-greater numbers within Southeast Asia.