Airfares may soon soar by up to 20%

A 20 per cent rise in airfare ceiling prices has been proposed to solve difficulties for businesses.

The proposal was discussed by the Ministry of Transport and the Ministry of Finance and a new ceiling price was expected by the end of next month.

The proposal follows approaches by the Viet Nam Civil Aviation Administration and many domestic airlines asking for permission to increase ticket prices to avoid losses due to the change in the exchange rate.

Department of Transport director Tran Ngoc Thanh said the depreciation of the dong had raised the cost of fuel and services at airports.

The Ministry of Transport had agreed with the proposal to increase the ceiling price by 20 per cent and would send it to the Ministry of Finance for appraisal, he said.

In its deliberations, the Finance Ministry would calculate how much of the burden business would have to share in accordance with Resolution 11 of the Government to curb inflation.

The new ceiling price would be applied by the end of next month if the plan was approved by the Finance Ministry.

Air Mekong CEO Doan Quoc Viet said an airfare price adjustment was necessary to ensure the existence and development of air businesses. However, the actual airfare price adjustment depended on market demand.

Raising the ceiling price did not necessarily mean that airfares would hit the ceiling but rather it would create a framework for air companies to set airfares in a flexible manner.

He added that raising the ceiling price would help ease difficulties but would not completely compensate for extra expenses of air companies.

Viet said air services were regarded as a luxury for average income earners and entrepreneurs. Air service prices did not have much influence on CPI but air transport had an important impact on economic development. — VNS

Tags: Airfares