Vietnam Daily News

Airliners not satisfied with new fare rates

Written by Dailynews.vn Saturday, 10 December 2011 17:22

Although the ceiling prices of domestic air tickets have recently been increased dramatically, airliners have said they want prices to soar even further, the Civil Aviation Administration of Vietnam (CAAV) said yesterday.

"Prices have been hiked by 1.3 times, while the desired rate of Vietnam Airlines (VNA) and Jetstar Pacific is 1.5, and Air Mekong, 2 times," Luu Thanh Binh, deputy head of the CAAV, told a press briefing about the ceiling price adjustment yesterday.

Binh said the new ceiling prices had their calculation based on the cost price and expenses of the air carriers.

Earlier this week, the Ministry of Finance gave airliners the go-ahead to hike the ceiling prices of domestic flights by up to 20 percent, as of December 15.

Accordingly, the ceiling price for a single ticket on the HCM City - Hanoi air route will be increased from VND2.22 million to VND2.69 million (US$129), excluding taxes and surcharges.

Single tickets for HCM City - Da Nang flights will go from the current cap of VND1.48 to VND1.77 million.

Meanwhile, the Hanoi - Phu Quoc route will cost up to VND3.27 million as of mid-December. Airfare for this route currently fetches VND2.72 million.

Lai Xuan Thanh, another deputy head of the CAAV, added that, given the current economic difficulties facing the country, all air carriers would incur losses if the ceiling airfares remained unchanged.

Even with the new rates, only airliners offering services on routes less than 500 kilometers in length will have profitable operations, Thanh said.

Meanwhile, Binh said that although the new ceiling prices are high, the CAAV has ordered each airliner to develop a pricing scheme with at least seven price bands.

"The bands have to consist of low prices to enable low-income earners to buy budget airfares," he said.

In fact, many airliners already provide numerous price bands for passengers.

JPA, for instance, has 17 different ticket rates starting from VND20,000 a ticket. Meanwhile, the minimum rate for a VNA ticket is VND100,000.

Thanh assured that the air carriers will continue to offer reasonable prices for their services to attract passengers in the face of harsh competition.

For his part, Nguyen Tien Thoa, head of the Price Management Agency under the Ministry of Finance, said all expenses contributing to the new ceiling price calculation such as fuel cost, exchange rate, and aircraft and pilots hiring fees, have been audited.

"Passengers should not focus only on the maximum price, since there are in fact many different price bands for them to choose from," Thoa said.

Regarding the travel agencies' concerns on how the new pricing scheme will affect them, Thoa said the tour organisers will have to carefully consider the airliners' available price bands and choose the most suitable rates for their tour packages.

He reiterated that prices have been adjusted to save the air carriers from incurring losses from offering services of less than 500 kilometers.

"The adjustment is to reduce disadvantages for both passengers and the airliners," Thoa assured.

"It will also create conditions for the carriers to cover expenses, and to later open new air routes and increase their number of flights."

Source: www.intellasia.net/news/articles/business/111350374.shtml