Minister of Finance: Maintain ceiling, remove floor for air tickets to protect people's interests

Finance Minister Ho Duc Phoc said that keeping the ceiling and removing the floor price of air tickets is to allow people to access aviation services at reasonable prices.

On the afternoon of May 23, the National Assembly discussed the draft Law on Prices (amended). Whether to maintain ceiling and floor prices for domestic air transport services (airfares) received many comments from National Assembly deputies.

Finance Minister Ho Duc Phoc, when explaining, said that the Government's view that it is necessary to regulate ceiling prices for air tickets is to protect the interests of consumers and low-income people in accessing aviation services and reduce social costs.

According to him, there are currently 6 airlines, so to ensure competition between airlines, and State management needs to regulate price ceilings. He added that the State always shares with businesses, such as reducing environmental protection tax by 70% on jet fuel recently to help airlines lower costs and fares.

Regarding the floor price of airline tickets, Minister Phuc said that currently some countries such as China, India, and the US have set a minimum price for this item.

According to him, the current price range of airlines is very wide, 10-15 levels, not all prices are set to the floor price, but depend on each flight and customer group. "Therefore, it is necessary to remove the floor price and keep the ceiling on airfares to ensure consumer rights," said Minister Ho Duc Phoc.

Minister of Finance Ho Duc Phoc explains at the discussion session of the Law on Prices (amended) on the afternoon of May 23. Photo: Hoang Phong

In a previous discussion, delegate Pham Van Hoa ( Dong Thap ) also said that it is necessary to maintain a ceiling on airfares, because "if there is no ceiling, airlines can increase ticket prices whenever they want."

"Keep the ceiling price on air tickets so that people can enjoy reasonable prices," said Mr. Hoa.

In the report explaining and accepting this bill, the National Assembly Standing Committee also agreed with the viewpoint of maintaining the ceiling price and removing the floor price for airline tickets. Mr. Le Quang Manh, Chairman of the Finance and Budget Committee, said that this viewpoint was also considered necessary by the National Assembly Standing Committee. Because if the ceiling price is removed, the State will not have a regulatory tool and will let service providers have full authority to decide on service prices.

"Airlines can absolutely set high service prices and airfares, affecting consumer rights, production, business and society," Mr. Manh said.

However, there are also opinions that disagree with this regulation. Mr. Ta Van Ha, a delegate from Quang Nam province, said that the ceiling and floor prices for airline tickets should be removed because they are not suitable for the market economy and market price mechanism.

According to the delegate, the application of ceiling and floor prices is also not in accordance with the Law on Civil Aviation of Vietnam and the Law on Competition. On the other hand, there are currently 6 airlines, and no airline route has a monopoly.

In fact, high prices during peak periods, according to him, reflect the market economy and supply and demand. Ceiling prices account for a small percentage of the number of airline tickets sold.

"Not regulating ceiling and floor prices does not mean that airlines will increase prices simultaneously. On the contrary, it helps airlines have flexible pricing policies, increase low prices to stimulate demand, and encourage customers to travel by air," said Mr. Ha.

Mr. Ta Van Ha, delegate of Quang Nam province, spoke at the discussion session of the Law on Prices (amended) on the afternoon of May 23. Photo: Hoang Phong

Regarding the zero-dong airfare of airlines , according to the National Assembly Standing Committee, there are actually no "zero-dong" airfares because Circular 17/2019 of the Ministry of Transport clearly stipulates the principle of pricing a ticket that must include taxes and fees as prescribed.

The "zero-dong price" does not include taxes and fees, and consumers still have to pay a certain amount. Recently, some airlines have applied "zero-dong ticket" prices as a form of promotion, only applied to a few seats on a flight, and in reality, the price to be paid is not zero dong.

Currently, airlines have built flexible price ranges with many different prices, corresponding to different conditions and times. Revenue and costs will be calculated in total according to flights and routes.

On the other hand, to determine whether an airline violates the Competition Law or not, it is necessary to base it on the total cost of each flight and the average price of the airfare, not just on individual ticket prices.

To avoid abuse and ensure competition between airlines with this type of ticket, delegate Nguyen Thi Suu (Thua Thien Hue) suggested that the term "zero-dong price" should be considered replacing with "preferential price or promotional price".

It is expected that the draft Law on Prices (amended) will be considered and approved by the National Assembly at the end of the 5th session.

Mr. Minh

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