Passengers check in before boarding at Tan Son Nhat airport.
Nearly 10 years before increasing the ceiling price
According to Circular 34/2023 of the Ministry of Transport, from March 1, the domestic airfare ceiling will increase by about 3.75% compared to the current price, equivalent to an increase of 50,000 – 250,000 VND/ticket/sector. Specifically, the route from 500 km to less than 850 km has a ceiling price of 2.25 million VND/ticket/sector. For routes with a distance of 850 km to less than 1,000 km, the maximum fare is 2.89 million VND/ticket/sector. Routes from 1,000 km to less than 1,280 km have a ceiling price of 3.4 million VND/ticket/sector. Routes with a distance of 1,280 km or more will have a ceiling price of 4 million VND/ticket/sector.
Explaining the increase in airfare ceiling, according to the Civil Aviation Authority of Vietnam, this increase is only enough to partially compensate for airlines’ costs in the context of difficulties after COVID-19 pandemic. In fact, all airlines have built products and domestic airfare prices within the regulated price range, suitable for the needs of passengers and the market in each period.
For example, during peak periods, airlines will increase ticket sales rates, while during off-peak periods or with delayed flights, ticket prices will be reduced. On the other hand, when applying flexible and diverse price policies, it has provided opportunities for people to participate in air transportation at affordable prices, while airlines have the opportunity to fill in vacancies, especially during off-peak periods and overnight flights; thereby contributing to the development of the domestic aviation market with vibrant competition in the transportation policies of airlines.
Mr. Le Hong Ha, General Director of Vietnam Airlines, said that after 10 years, this is the first time the aviation industry has adjusted the domestic airfare ceiling. With this time, there have been many input costs of the aviation industry that have not changed, especially fuel prices, factors related to exchange rates – the aviation industry uses USD for most of the cost structure, so adjusting the airfare ceiling is reasonable for air operators.
“When airfare is adjusted, it will create additional conditions for airlines to offset costs in recent years, and also an opportunity for airlines to continue to adjust their fare ranges on the domestic flight system to provide passengers with more options,” said Mr. Le Hoang Ha.
People hope that when airfares increase, accompanying services will also increase in quality.
According to some people, adjusting airfares will receive consensus when price increases mean increased services accompanied to meet the satisfaction of passengers. Recently, despite paying a considerable amount to airlines, people still had to endure continuous cancellations and delays during peak periods.
However, the airfare increase also causes people with low incomes to hesitate when choosing means of transportation in the near future. Ms. Nguyen Le Thu, a resident of Thu Duc City (Ho Chi Minh City), calculates: “Previously, the price from Ho Chi Minh City to Tuy Hoa (Phu Yen) was only about 1.2 – 1.5 million VND/ticket so now it has been adjusted to increase to 2.5 – 4.5 million VND/ticket… With about 5 – 9 million VND, my family can comfortably spend on a road trip back to our hometown, because now the North-South highway connecting from Ho Chi Minh City to Nha Trang has completed so travel by road is also faster than before. Not only that, but bus ticket prices are also much cheaper, only a few hundred thousand VND/person. Therefore, this summer, my family of 4 people will choose to buy bus tickets instead of plane tickets like before.”
Tourists prioritize local tours, overseas tours
Mr. Nguyen Minh Man, Director of Communication and Marketing of TSTtourist Company, said that the adjustment of airfare ceilings from March 1, 2024 has an immediate impact on domestic tour routes. Currently, tour prices operated by air transport companies are being adjusted upwards. This also shows that the domestic tourism industry will face more difficulties when competing with international tourism.
Tourists tend to travel by road more often in 2024.
In addition, according to Mr. Nguyen Minh Man, when airfares increase, travel in close proximity and independent travel will increase. Taking Ho Chi Minh City’s passenger market as the focus, destinations around Ho Chi Minh City such as Vung Tau, Ho Tram, Phan Thiet, Phan Rang… and even Nha Trang will be the choices of tourists, in which transportation by car will increase due to the time-saving advantage of the North-South Expressway currently being completed.
Agreeing with the above opinion, Mr. Pham Quy Huy, Director of Kiwi Travel Company, said that domestic tourism is already less competitive than international tourism, and now it is predicted to be even more difficult when airfares increase. Specifically, domestic tours by air will be difficult because the costs associated with air travel will increase. In fact, even though it is not yet the peak of summer, air ticket prices have already increased significantly.
“Moreover, when domestic airfare prices increase, passengers will switch to buying overseas tours because airfares to foreign countries do not increase, and they are even cheaper than domestic fares. For example, the round-trip ticket price from Ho Chi Minh City to Hanoi is about 3.5 – 6 million VND/person, while the price of air tickets for tours to foreign countries like Thailand and Singapore is about 3 – 4 million VND/person,” added Mr. Pham Quy Huy.
Tourists in Ho Chi Minh City take souvenir photos with ancient Tung trees in Nam Cat Tien forest.
As a company selling airline tickets, Ms. Tran Thi Bao Thu, Marketing Director of Vietluxtour, also said that adjusting airfare ceilings will affect the prices of some domestic tour routes and domestic business activities. Therefore, to keep customers from being “shocked,” businesses will carefully consider plans to increase ticket prices or choose to reserve a large number of tickets for peak seasons.
For MICE tours and inbound tours, passengers usually sign contracts early, so businesses have time to prepare reservations, so there have been no changes in ticket prices for certain routes, suppliers, or trips. In the long run, as airfares increase, routes by road to Quy Nhon, Nha Trang, Tuy Hoa… are likely to increase.
