Proposal to increase domestic airfares

How will domestic airfares change in the latest proposal of the Ministry of Transport ? Please refer to the article below.

Proposal to increase domestic airfares. (Source: TVPL)

The Ministry of Transport is drafting a Circular amending and supplementing a number of articles of Circular 17/2019/TT-BGTVT promulgating the price framework for passenger transport services on domestic flights, including a proposal to increase domestic airfares for flights with a distance of 500 km or more.

DOWNLOAD : Draft Circular amending Circular 17/2019/TT-BGTVT

Ministry of Transport proposes to increase domestic airfares

Specifically, the Ministry of Transport has proposed to amend the price framework for basic economy class passenger transport services as follows:

Group	Flight distance	Maximum level (VND/one-way ticket)
I	Under 500 km
1.	Socio-economic development flight route group	1,600,000
2.	Other flight groups under 500 km	1,700,000
II	From 500 km to under 850 km	2,250,000
II	From 850 km to under 1,000 km	2,890,000
IV	From 1,000 km to under 1,280 km	3,400,000
V	From 1,280 km and up	4,000,000

Compared with the current price in Circular 17/2019/TT-BGTVT:

- Basic economy class passenger transport service prices under 500 km remain the same .

- For flights with a distance from 500 km to less than 850 km, the proposed maximum price increases from VND 2.2 million/one-way ticket to VND 2.25 million/one-way ticket, an increase of VND 50,000 (2.27%) compared to the current price.

- For flights with a distance of 850 km to less than 1,000 km, the proposed maximum price increases from VND 2,790 million/one-way ticket to VND 2,89 million/ticket, VND 100,000 higher (an increase of 3.58%) compared to current regulations.

- For flights with a distance from 1,000 km to less than 1,280 km, the proposed maximum price increases from 3.2 million VND/one-way ticket to 3.4 million VND, 200,000 VND higher (6.25% increase) compared to current regulations.

- For flights with a distance of 1,280km or more, it is proposed to increase from 3.7 million VND/one-way ticket to 4 million VND, 250,000 VND higher (6.67% increase) compared to the current price.

* Basic economy class passenger transportation service price is the service price that passengers must pay for a journey using the economy cabin of an aircraft for a service class that meets the basic requirements of the majority of passengers on the flight from ground services to in-flight services.

(Clause 1, Article 2, Circular 17/2019/TT-BGTVT)

Principles for determining the price frame for passenger transport services (Current)

The principles for determining the price frame for passenger transport services are stipulated in Article 3 of Circular 36/2015/TT-BGTVT on management of domestic air transport service prices and prices of specialized aviation services, specifically as follows:

(1) General principles for domestic air transport service prices and aviation specialized service prices:

- Service prices are determined based on reasonable actual production and business costs; consistent with service quality and market supply and demand;

- The price is suitable for the socio -economic development policy in each period and suitable for the price level of the same type of service in the ASEAN region;

- Service prices must ensure competitiveness and not abuse monopoly position.

(2) In addition to the general principles specified in (1), organizations and individuals providing specialized aviation services must comply with the following principles:

- Air service prices for international flights are determined on the basis of ensuring investment capital recovery, creating accumulation for the unit, suitable for output and investment scale; allowing the application of pricing methods to improve the quality of airport services;

- Air service prices for domestic flights are determined on the basis of domestic market prices, taking into account the relationship between domestic and international prices of the same type of service;

- Prices of non-aviation services at airports are implemented on the principle of non-exclusivity, in accordance with the market, ensuring customer rights and regulations of law on prices.

(Clause 1, Article 3, Circular 17/2019/TT-BGTVT)

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