Airfares could climb if fee hike approved in Vietnam

By Bui Hong Nhung   July 1, 2016 | 03:51 am PT
Airfares could climb if fee hike approved in Vietnam
Photo by VnExpress Photo Contest/Bui Ngoc Ngu
Possible increases to airport charges and fees, coupled with a recent request from state-owned carrier Vietnam Airlines asking for airfare caps to be removed, could cost Vietnamese citizens more money.

In mid-June, the Airports Corporation of Vietnam (ACV), which manages 21 airports nationwide, sent a development plan to the Ministry of Transport in which it said that airport charges for domestic flights should be raised.

Dao Viet Dung, deputy director of ACV, said that airport fees for local flights are 2.5-8 times lower than international flights, while investment expenses for both domestic and international airports do not bear significant differences.

The ACV asked the ministry to push up airport fees for regional flights, reducing the gap from a maximum of eight times to just four times.

The adjustments would be applied at seven international airports to start with: Noi Bai, Tan Son Nhat and Da Nang, the three largest airports in Vietnam.

In response, Deputy Minister of Transport Nguyen Nhat said that any increase to airport charges and fees must follow a roadmap, and it would be impossible for the ministry to raise the fees as quickly as the ACV suggested.

Nhan added that they will consider the ACV’s plan to ensure benefits for both passengers and carriers.

A representative from one carrier said that airport charges are included in airfares, and carriers are responsible for paying airport authorities. If fees are raised, airfares will follow.

Abolishing airfare caps

While carriers are raising concerns about a rise in airport charges and fees, which will trigger airfare hikes, Vietnam Airlines, flag ship carrier of the country, has recently asked the Civil Aviation Authority (CAA) to abolish ceiling prices on domestic flights.

A government news portal quoted Lai Xuan Thanh, director of the CAA, saying that airfare caps have been set in many countries around the world with the aim of ensuring competition among carriers and protecting customers’ rights.

In Vietnam, the aviation industry has seen stiff competition among local and foreign airlines, so “it’s time for a self-regulating market”. However, Thanh didn’t give a specific timeframe for the removal.

Regarding concerns about collaboration between carriers to increase airfares, the director said: “There will be provisions to control prices after the caps are lifted. The government will also intervene if carriers collude to raise prices.”

Last year, the CAA slashed the ceiling price on domestic flights by four percent. The maximum price remains unchanged at $165.

Data from the CAA showed that Vietnam’s aviation sector recorded robust development with an on-year increase of 25 percent in passenger numbers in the first four months of 2016. The market is dominated by state-owned carrier Vietnam Airlines and private carrier VietJet Air.

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