According to Circular 34/2023 of the Ministry of Transport, starting from today, March 1, the ceiling price of domestic air tickets will increase by about 3.75% compared to the current rate, equivalent to an increase of 50,000 – 250,000 VND/ticket/one way.
Increasing the ceiling price to compensate for costs?
Specifically, for flights from 500 km to less than 850 km, the ceiling price is 2.25 million VND/ticket/one way. For flights with a distance of 850 km to below 1,000 km, the maximum ticket price is 2.89 million VND/ticket/one way. Flights from 1,000 km to below 1,280 km have a ceiling price of 3.4 million VND/ticket/one way. Flights with a distance of 1,280 km or more will have a ceiling price of 4 million VND/ticket/one way.
According to an official from the Civil Aviation Authority of Vietnam, this increase is only enough for airlines to partially offset costs in the context of difficulties due to the COVID-19 pandemic.
The Civil Aviation Authority of Vietnam also affirmed that all airlines are developing products and domestic air ticket prices within the regulated framework, suitable for the needs of passengers and the market in each stage. For example, during peak periods, airlines will increase the ticket sales ratio, while in low periods or with off-peak flights, ticket prices will be reduced.
“The application of flexible and diverse pricing policies has provided opportunities for people to participate in air transportation at reasonable prices while allowing airlines to fill empty seats, especially during off-peak periods and overnight flights. This contributes to promoting the development of the domestic aviation market with vibrant competition in terms of transport policies of airlines,” said an official from the Civil Aviation Authority of Vietnam.
According to Le Hong Ha, CEO of Vietnam Airlines, the last adjustment to the ceiling price of air tickets was in 2015. Many input costs in the aviation industry have changed over the past 10 years, especially fuel prices and exchange rates. The increase in the ceiling price of domestic air tickets from March 1 is a condition for airlines to offset costs and an opportunity for airlines to continue adjusting ticket prices on the domestic routes.
“Air ticket prices are currently implemented according to flexible mechanisms, depending on market conditions, ticket conditions, ticket issuance time… Even though the ceiling price of domestic air tickets has increased, the price range this year will be equivalent to last year. Specifically, in the summer of 2024, the airline will apply an optimized pricing policy within the ceiling price regulations,” said a representative of Vietnam Airlines.
Representatives from Vietravel Airlines also believe that the current price range on domestic routes does not guarantee operating costs and long-term profitability. In fact, the peak period during the Tet holiday in 2024 recorded a high demand, but the domestic aviation market still decreased by 13% compared to the previous year.
According to Vietravel Airlines, new market developments and the supply capacity of airlines can affect air ticket prices this year. Increasing the ceiling price helps airlines balance direct and indirect costs and ensure long-term operations.
The increase in the ceiling price of domestic air tickets from March 1 may affect domestic tourism. Image: LAM GIANG
A day before the increase in the ceiling price of air tickets, a representative of a travel company said that the company’s management has just decided to transfer the deposit for this summer to February 29 to maintain the unchanged air ticket prices.
Pham Anh Vu, Director of Communications at Vietnam Travel Company, said that in 2023, high air ticket prices have caused domestic tour prices to increase, reducing the choice of tourists for domestic destinations such as Phu Quoc and Ha Long. After comparing domestic tour prices with nearby tourist destinations such as Thailand and Singapore, many people decide to travel abroad. “The impact of the increase in the ceiling price of domestic air tickets is not immediately apparent because the current demand is not high yet, but around the end of March and early April, when demand increases, the impact may become more evident,” Vu commented.
From a different perspective, many travel businesses believe that the increase in the ceiling price of air tickets will immediately impact the tourism industry. Nguyen Minh Man, Director of Communications and Marketing at TSTtourist Company, said that domestic tour prices have to be adjusted immediately after the increase in the ceiling price of air tickets. However, the level of price increase this time is still acceptable.
Pham Quy Huy, Director of Kiwi Travel Company, reflected that although it is not yet the peak summer season, air ticket prices have already increased significantly. Many customers with early booking plans are now prioritizing destinations that are nearby and can be reached by road transportation. In addition, customers tend to choose overseas tours as international airfares are becoming more competitive.
As observed, flights from Ho Chi Minh City to Hanoi, Phu Quoc, Nha Trang, etc. in March 2024 have very high prices. It is paradoxical that the HCMC – Hanoi route has a round-trip fare of about 4.5 – 6 million VND per person, while a 4-day tour costs only about 3.5 – 4 million VND per person. “If the total tour cost – including air tickets – is about 7-10 million VND per person, tourists will choose to go to Thailand, Singapore, etc. more often. Many travel companies no longer dare to hold many air tickets as before because they are afraid of price fluctuations,” Huy said.
In the context of the increase in the ceiling price of air tickets, many forecasts suggest that destinations that can be reached by road and self-guided tours will be preferred. With passengers departing from Ho Chi Minh City, according to Doan Thi Thanh Tra, Head of Marketing at Saigontourist Service Company, passengers can switch from package tours to self-guided tours in destinations such as Vung Tau, Phan Thiet, Nha Trang, etc. “When expressways make road travel more convenient, travel businesses also have to adapt. In recent times, we have shifted to providing customizable services at destinations, not only hotel bookings but also ticket bookings at tourist sites, amusement parks, or restaurants, to meet all the needs of self-guided tour customers,” Tra said.
Preventing unauthorized price increase
The Civil Aviation Authority of Vietnam has directed airlines and aviation service providers to comply with regulations, implement ticket sales within the framework of regulated price ranges and transport policies. At the same time, the authority also instructs units to strengthen monitoring, inspections, and supervision to support and ensure the best interests of passengers traveling by air, and prevent unauthorized price increases.
Post-Tet air ticket prices are still very high
According to reporters’ observations, passengers currently have to buy air tickets at high prices, comparable to the peak time during the Lunar New Year holiday in 2024.
After returning from Hanoi two days ago, Nguyen Phuong Nam (residing in Dong Nai province) said that the Hanoi – Ho Chi Minh City route had a fare of 3 million VND/way, nearly triple the price of the return ticket purchased about two weeks ago. Similarly, Ms. Tran Thuy Linh (from Ho Chi Minh City) had to buy a ticket for the Hai Phong – Ho Chi Minh City route departing on March 1 at a price of 4 million VND/way. “Even though it is already after the Lunar New Year, the price is still very high?” Linh wondered.
Many people with plans to fly from provinces in the North to Ho Chi Minh City have had to postpone their departure by a few days, or even move it to the end of January to wait for air ticket prices to decrease.
An official from an airline explained that the demand for flights from the Northern provinces to Ho Chi Minh City is still high, so the ticket prices have not been reduced yet. In about 1 – 2 weeks, it will be the low season, the demand will decrease and the ticket prices will decrease accordingly.
Regarding the information that some airlines have reduced their flight operating capacity due to issues with Pratt & Whitney engines used on A321 aircraft, according to the findings of reporters, some airlines use A321 aircraft as the mainstay of their fleet.
On the sidelines of the recent International Aviation Safety Seminar (IAS), Vietnam Airlines CEO Le Hong Ha disclosed that the disruption in the supply chain involving Pratt & Whitney engines had caused the airline to temporarily suspend the operation of 12 A321 aircraft, equivalent to 20% of the main fleet for domestic routes.
T. Phuong
