Aviation and tourism industries fail to coordinate in peak travel periods

According to research conducted by VnExpress, the prices of domestic flights between Hanoi and Phu Quoc for the April 28- May 1 long weekend for the Reunification Day and Labor Day is VND5.3 million ($211) for unfavorable hours (leaving at 3 p.m. and returning at 7 a.m.), and VND6.5 million for more favorable hours.

These prices are tripled the normal prices for the same flights, and there are not so many seats left available.

Similarly, the flight tickets between Hanoi and Da Nang for unfavorable hours (leaving at 6:25 a.m., returning at 11:25 p.m.) during the period cost VND4.3 million and for favorable hours, VND4.8 million.

The cost for the same flights a week prior would just be VND2.6 million.

With these increases in airfares, many travel agencies are worried about slow number of travelers for domestic tours, a common situation during the Reunification Day (April 30) holiday period.

However, aviation insiders said that airlines should not be blamed for the problem, and the public should adopt a more objective view.

Tran Huy Cong, head of business development of Viettravel Airlines, said that airlines have different bands of prices for each flight.

They use a computer algorithm to calculate the average revenue needed for a flight and the average seat-fill ratio of a flight. From there, the airlines would allocate the tickets by bands to utilize revenues accordingly.

Theoretically, for any period, customers could buy affordable flight tickets if planned. However, during peak travel periods like the Lunar New Year or the Reunification Day holiday, airlines face a dilemma, with one direction having a high demand and the return direction having insignificant demand.

For example, with Viettravel Airlines, the flight from HCMC to Phu Quoc always has a seat-fill ratio 20% higher than the flight from Phu Quoc to HCMC during these occasions. This imbalance in demand hikes up the prices, despite the airlines already taking some losses to make the increase in price more reasonable, Cong said.

"The issue of high-ticket prices during holiday periods will only be resolved if there is more balance between demands from two directions."

Cong said the biggest proportion of flight tickets is the cost of aviation fuel and the cost of the airplane, either rented or bought which together account for 60 to 70% of the ticket price. The rest are sales, airports, airway, and human resource costs.

Similarly, an aviation expert said that a domestic flight costs the airline approximately US$10,000, about 30% of which is fuel cost.

The airline also needs to pay the airplane's rental fee, insurance, flight crew's salaries, airport costs, and others, the expert said.

Cooperation

Dr Nguyen Thien Tong, former lecturer at HCMC University of Technology, said there should be an arrangement between the tourism destinations and airlines that help tourists save travel cost during big holidays.

Tourism destinations can intervene with special pricing policies and cooperate with airlines to provide air ticket and accommodation combo package to travelers, Tong said.

Discouraged by expensive airfares, travelers will choose a closer destination or go straight abroad, given more stable airfares from foreign airlines, causing a loss to domestic tourism, he said.

Nguyen Tien Dat, CEO of AZA Travel, a travel agency based in Hanoi, suggested that during holiday periods, aviation companies and travel agencies could cooperate to discount price tickets the day before and after the holiday, which may ease the demands and stress of peak travel days.

However, this is a macro issue that the aviation and tourism industries cannot solve by themselves. There is a need for a "conductor," Dat said.

Hoang Minh, an aviation industry expert, agreed that the aviation and tourism industries in Vietnam were currently operating without much communication or cooperation.

No companies are willing to accept any losses, so there should be interventions and coordination from local authorities or even the central government, Minh said.

Support can come in different forms, such as a supporting fund to help lower some costs for airlines with the condition that all of the reduced costs would be directly reflected in ticket prices.

Though the aviation industry received a 50% discount on airport fees for one year during the Covid-19 pandemic, companies said that the one-year discount was unable to have a long-term impact on flight costs due to the global increase in fuel prices in recent years.

Various aviation markets have adopted centralized policies to promote tourism. In 2022, the Civil Aviation Administration of China announced a two-month support package to all domestic airlines to promote transportation post-Covid. This package consists of $700 million, with 70% funded by China’s Ministry of Finance and 30% funded by the budget of local provincial governments.

Similarly, in 2020, Taiwan launched a program named "Taipei Go" with over 250 hotels and accommodation facilities to provide $35 discount each to 100,000 tourists. In 2023, Taiwan again launched a program that gifted $165 to 500,000 international tourists.

According to Minh, tourists should also become more informed about their options to make better plans during peak travel periods.

Tourists still want very cheap tickets, as they once received during the pandemic when airlines struggled with record-low demand. That day is far gone, Minh said, especially considering the rising aviation costs.