Domestic airfare ceiling price may increase up to 4 million VND

The Ministry of Transport is seeking opinions on amending a number of articles of Circular No. 17/2019 on the price framework for passenger transport services on domestic flights.

Specifically, according to the draft new circular, the group of routes with a distance of less than 500 km will still maintain the current ceiling price of 1.6 million VND/one-way ticket for socio-economic development routes and 1.7 million VND/one-way ticket for other groups of routes under 500 km.

Domestic airfare ceiling price may increase up to 4 million VND - 1 — According to the draft new circular, the ceiling price for domestic economy class air tickets is expected to increase from 50,000 to 250,000 VND, depending on the route.

For flights with distances from 500 km to under 850 km, the ceiling price increases by 50,000 VND/one-way ticket from 2.2 million VND to 2.25 million VND.

For flights with a distance of 1,000 km to less than 1,280 km, the new draft proposes a maximum price of 3.4 million VND, 200,000 VND higher than current regulations.

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

For flights of 1,280 km or more, the suggested price is 4 million VND. This figure is 250,000 VND higher than the current regulation and is the highest price.

The above maximum price includes all costs that passengers must pay for an air ticket, except for the following fees: value added tax; fees collected on behalf of the airport, including passenger service fees and passenger and baggage security fees; service fees with additional items.

The maximum service price does not include the service price for additional items. This price is decided by airlines based on the balance of the airline's service provision capacity and market demand.

Airlines regulate specific ticket prices on routes or groups of routes by diversifying ticket prices for each route and regularly implementing discount policies for compatriots and soldiers residing in remote, border, and island areas.

Previously, there was a public opinion that the ceiling price for air tickets should be removed. However, many analysts said that when there is still an airline company dominating the market, the ceiling price for air tickets should not be removed.

Responding to VTC News , economic expert Associate Professor Dr. Dinh Trong Thinh (Academy of Finance) said that the current floor price is a measure to avoid the situation where airlines collude to raise prices on some routes where these businesses hold a dominant market share.

" Applying price ceilings ensures consumer rights and ensures fair and equal competition. In the current context, the Vietnamese aviation market still has airlines that dominate some routes. Without price ceilings, it would be very difficult to control ticket prices, especially during peak periods such as holidays and Tet, " said Mr. Thinh.

Sharing the same view, Associate Professor Dr. Ngo Tri Long, former Director of the Institute for Price Research (Ministry of Finance) frankly said that the proposal to remove the ceiling price for air tickets is unreasonable and difficult to pass because it violates the Law on Price Management and the Law on Competition.

" The Vietnamese aviation market currently still has a few businesses holding a dominant position, so the State must regulate price ceilings to ensure consumer rights, " said Mr. Long.

According to competition law, if two enterprises have a total market share of 50% or more or three enterprises have a total market share of 65% or more in the relevant market, they are considered to have a dominant market position. There are currently 6 airlines operating in the Vietnamese aviation market: Vietnam Airlines, Pacific Airlines, Vasco, Vietjet Air, Bamboo Airways and Vietravel Airlines. However, Vasco and Pacific Airlines are members of Vietnam Airlines, while Vietravel has just entered the market. Currently, the three major airlines, Vietnam Airlines, Vietjet Air and Bamboo Airways, account for about 80% of the market share. In particular, on the Hanoi - Ho Chi Minh City route alone, Vietnam Airlines and Vietjet have also accounted for over 50% of the market share.

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