Average ceiling domestic airfares to rise 23%

The carriers can decide their own fares for domestic flights on the new caps.

Local airlines can hike their highest airfares by nearly 23% on average this Wednesday following a new Ministry of Finance decision.

The ceiling fares applicable to Vietnam Airlines and its subsidiary Vietnam Air Services Co. (Vasco), Jetstar Pacific and Air Mekong may rise to about VND863,000 (US$42) for one-way flights of less than 300 kilometers, VND1.1 million for 300 kilometers to less than 500 kilometers and around VND1.48 million for 500-850 kilometers.

The ceilings will be about VND1.9 million for 850 kilometers to less than 1,000 kilometers, around VND2.23 million for 1,000-1,280 kilometers and VND2.73 million for one-way flights longer than 1,280 kilometers. These fares are exclusive of value-added tax (VAT) and surcharges.

The carriers can decide their own fares for domestic flights based on the new caps but are required to clearly publicize their ticket prices, conditions and service charges for customers to select in line with the decision.

The decision comes about one month after officials of the transport and finance ministries convened a meeting to discuss proposals by the Civil Aviation Administration of Vietnam and local airlines for ceiling airfare hikes.

Previously, the aviation authority proposed the Ministry of Transport consider allowing for increases of 20-27% in the highest permissible airfares to help local airlines cope with increasing operational costs resulting from the fall of Vietnam’s dong against the U.S. dollar and rising world oil prices.

Local airlines earlier proposed increasing their domestic airfares by between over 20% and 50%. Vietnam Airlines also looked for approval to gradually remove the price caps in the years to come.

Currently, airlines can charge a maximum of VND682,000 per ticket on one-way flights shorter than 300 kilometers, VND864,000 for 300-500 kilometer flights, VND1.18 million for flights longer than 500 kilometers, and VND1.819 million for flights longer than 850 kilometers. These prices do not include VAT and surcharges.

Vietnam Airlines, Jetstar Pacific and Air Mekong have not announced their new fare levels, which experts said would be flexibly adjusted based on market demand and competition. The carriers will have the opportunity to apply the new fare ceilings in peak times of air travel, usually on public holidays and the routes where demand is high. – SGT

Tags: Vietnam air fare, Vietnam aviation, Vietnam aviation industry, Vietnam aviation market