Study considers adjusting domestic airfare price cap

The Ministry of Construction has tasked the Civil Aviation Authority of Vietnam with comprehensively assessing the two options above. Under the surcharge option - a fee outside the fare cap - the legal basis, authority and calculation method must be clearly defined.

The sector regulator must also review the current fare cap framework for domestic air tickets, assess the business and operating situation of airlines after support policies have been implemented, and analyze the advantages and disadvantages of each option and their impact on the consumer price index. The ministry also requested clarification on whether the proposed surcharge includes value-added tax.

At the same time, the authority needs to work with airport operators and air navigation service providers to develop a plan to reduce takeoff, landing and air traffic service charges in order to lower input costs for businesses.

According to the Ministry of Construction, the government and ministries have recently implemented various measures to support aviation businesses, such as adjusting import taxes on fuel and developing policies to exempt or reduce fees and charges in the transport sector. However, these measures have not fully offset the impact of fuel price fluctuations.

Recent increases in Jet A-1 aviation fuel prices have mainly been driven by strong volatility in global crude oil prices, including the impact of tensions and conflict in the Middle East that have disrupted supply. Meanwhile, the rapid recovery in air transport demand has increased supply-demand pressure, while higher transport and storage costs have pushed up fuel prices, directly affecting airlines' operating costs.

The Civil Aviation Authority of Vietnam said that since April, domestic airlines have had to adjust their route networks and seat supply to adapt to rising Jet A-1 prices in order to maintain operations and balance business efficiency.

On that basis, the authority proposed applying a fuel surcharge for economy-class passengers on domestic flights for about three months, ensuring a balance of interests among the state, businesses and the public.

Specifically, on routes of 500-850 km such as Hanoi-Da Nang, the surcharge is estimated at about VND 297,000 per ticket when fuel prices are at US$220 per barrel, raising the maximum fare from VND 2.89 million to VND 3.16 million. If fuel prices reach US$250 per barrel or higher, the surcharge could rise to VND 365,000, with the maximum fare at about VND 3.255 million.

For routes of 1,000-1,280 km such as Hanoi-Ho Chi Minh City, the surcharge is estimated at VND 450,000-553,000 per ticket, with the maximum fare potentially rising from VND 3.4 million to nearly VND 4 million. On routes longer than 1,280 km such as Hanoi-Phu Quoc, the surcharge would be about VND 553,000-680,000, with the maximum fare potentially increasing to VND 4.55-4.68 million.

 

Anh Duy