Domestic airfare ceiling price may rise to 4 million VND

The Ministry of Transport is seeking opinions on increasing the ceiling price for domestic flights by 50,000 VND to 250,000 VND.

This will be the basic economy class passenger transport service framework if agreed upon by ministries and sectors after the draft is completed for comments.

According to the new draft circular, flights from 500 km to under 850 km have a ceiling price of 2.25 million VND one way, an increase of 50,000 VND compared to the current ceiling price.

For flight routes from 850 km to under 1,000 km, the ceiling price increases by 100,000 VND per one-way ticket.

For flight routes from 1,000 km to under 1,280 km, the ceiling price increases by VND 200,000 per one-way ticket.

For flights from 1,280 km or more, the ceiling price increases by 250,000 VND per one-way ticket.

For flights under 500 km, transportation prices remain the same according to Circular 17, ranging from 1.6-1.7 million VND one way.

The above maximum price includes all costs that passengers must pay for an air ticket, minus fees such as value added tax, airport fees, and service fees with additional items.

Thus, instead of completely removing the ceiling on airfares as desired by airlines in Vietnam, the Ministry of Transport has sought opinions on raising the ceiling on airfares to help diversify aviation services.

The ceiling price of air tickets is expected to increase with each flight distance.

Previously, on June 5, the Vietnam Air Transport Association (VABA) proposed to remove the regulation on ceiling prices for air tickets, proposing that the Government remove this provision in the Law on Prices.

VABA believes that the regulation of ceiling prices for domestic air tickets "distorts the supply-demand relationship in the air transport market" and "adversely affects the business operations of airlines".

According to aviation experts, price ceilings are only appropriate in the period when a single airline has a monopoly and a private aviation market has not yet formed. To date, the country has six airlines competing with each other.

According to the Civil Aviation Authority, the current domestic ticket ceiling stipulated in Circular 17 was issued in 2015 when the price of Jet A1 fuel was around 60 USD per barrel, based on the price adjustment issued in 2014.

In 2022, Jet A1 prices exceeded $150 a barrel, and airlines proposed to increase the ceiling price of domestic airfares.

Thi Ha

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