Airfare price ceiling increase, domestic tourism worries about "starving" customers

Tour price increases with ticket price

Specifically, flights with a distance of less than 500 km have a ceiling price of 1.6 million VND/ticket/way for socio-economic development flights and 1.7 million VND/ticket/way for other flights. The remaining groups of flights, depending on the flight length, will be subject to a price increase of 50,000 - 250,000 VND/ticket/way compared to the old regulations, depending on the length of each flight.

Information from tourism businesses shows that the increase in airfare prices will affect domestic tours in attracting customers. According to General Director of AZA Travel Company Nguyen Tien Dat, tourists are in the "price-sensitive" group, which is clearly shown through the "lack of customers" of Phu Quoc tourism and many domestic destinations during the holidays and Tet in 2023. This phenomenon may recur in 2024 after airfare prices increase.

Tourists stroll around Hoan Kiem walking street during the Tet holiday. Photo: Hoai Nam — Tourists strolling in Hoan Kiem walking street during the Tet holiday. Photo: Hoai Nam

Currently, airfares account for 40-60% of the tour price structure. Therefore, the increase in airfares forces travel agencies to adjust domestic tour prices by 10-20%, reducing the attractiveness of the market and affecting the image of Vietnamese tourism in attracting international visitors. Thus, it can be said that the increase in airfares will have a major impact on travel agencies, thereby greatly affecting the stimulation of domestic tourism.

Vice President of Hanoi Tourism Association Do Dinh Cuong

“A survey at airline ticket agents showed that the Hanoi - Phu Quoc route in June 2024 increased from 1.3 million VND to 2.2 million VND; the Hanoi - Nha Trang route increased from 1.1 million VND to 1.7 million VND,” Mr. Dat gave an example.

Similarly, Director of Anhduong Tour Nguyen Tuan Anh informed that airfare accounts for 30-40% of the cost of tour products and travel combos. With the increase in the ceiling price, this cost accounts for 50-60% of the total tour price, making customers hesitant to buy tours traveling by air.

Challenges for the tourism industry

General Director of Viet Tourism Pham Phuong Anh informed that the increase in airfares is a challenge for the tourism industry. Especially in the low season when it can reduce the attractiveness of domestic tourism, causing the domestic market to be starved of tourists, the localities will be the first to be affected.

Tourists visit Ngoc Son Temple during the Lunar New Year holiday. Photo: Hoai Nam

According to tourism experts, the increase in domestic airfares has led to a 10-15% increase in tour prices, causing tourists to "weigh and weigh" more between domestic and international tours.

Director of Communications & Marketing of TST Tourist Company Nguyen Minh Man informed that the tour price is high or low depending on the price of services from airlines to cars, ships, restaurants, hotels, attractions... "In all services, the impact of airfare has a huge impact, just a small adjustment can make tourists change their plans, either go or not go, or switch to another option. In the constant thinking of many people, traveling abroad with the same price as domestic tours but more luxurious. This is a huge pressure for travel businesses" - Mr. Nguyen Minh Man shared.

According to information from tourism businesses, during the recent Tet holiday, domestic airfares increased too much, causing many people to cancel their domestic travel plans. Instead, package tours to Thailand, Malaysia, etc. with costs equal to the round-trip airfare of some domestic flights at the same time have become the choice of many tourists.

Vietnamese tourists visit Thailand. Photo: Hoai Nam

Director of Vina Group International Joint Stock Company Tran Thanh Vu shared that in terms of attractiveness, destinations such as Thailand, Indonesia... are not necessarily equal to Vietnam, but airfare is a big obstacle. Many customers come to us but when they see that domestic tours have more experiences than tours to Southeast Asia, after comparing and contrasting domestic tour prices with international ones, they choose to go to Thailand and Singapore. The fact that customers are shifting their consumption to buying foreign tours and limiting the use of domestic tours, although the company has still achieved its planned sales, has reduced the attractiveness of the domestic market, affecting the image of Vietnamese tourism in attracting international visitors.

To prevent domestic tours from being overshadowed by international tours, tourism experts say the aviation industry should coordinate with airline ticket agents to launch promotional tickets for early buyers and combo packages, thereby encouraging passengers to plan to buy tickets early to save costs and have more options.

Vietnamese tourists visit Thien Hau Pagoda in Malaysia. Photo: Hoai Nam

Giving advice to attract domestic tours, Vice President of Hanoi Tourism Association Do Dinh Cuong suggested that airlines associated with travel agencies also spend money to reduce service prices, thereby not increasing tour prices, supporting the aviation industry not to have to reduce ticket prices too much.

For routes without commercial flights, the aviation industry encourages travel agencies to charter entire flights, thereby diversifying products and adding new options for tourists. This will benefit all parties.

Source