Mr. Toan identified five reasons for the surge in airfares and proposed several solutions for airlines to proactively address these external factors.
“We are committed to enhancing productivity and launching new routes.”
Mr. Nguyen Bac Toan drew an analogy, stating that today’s seminar topic is even hotter than the weather and the upcoming summer season. Despite the intense heat, Vietjet has consistently focused on boosting production and expanding its flight network. To date, VJ has carried 195 million passengers. Moreover, the airline has actively collaborated with local governments to pioneer passenger and tourism markets, both domestically and internationally. The routes established by the airline to Australia and India were intended to be accessible to everyone. “Regarding domestic flights, Phu Quoc has witnessed a reduction in flight frequencies, but Vietjet operates 8 international and 4 domestic routes to this destination. Similarly, Da Nang and Chu Lai (Quang Nam) are served by 4 domestic and 5 international routes. On average, we operate 400–500 flights daily, which is a significant achievement for our airline,” asserted Mr. Toan.
Mr. Nguyen Bac Toan, Vice President of Commercial Affairs at Vietjet, remarked that the topic of airfare pricing is a hotly debated issue.
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Even in the aftermath of the Covid-19 pandemic, despite numerous challenges, VJ remained committed to providing substantial stimulus for the tourism industry, primarily targeting Thailand, South Korea, Japan, and Taiwan as source markets for visitors to Vietnam. By the end of 2023, the airline had launched 17 routes to India and covered all of Australia. Simultaneously, they had initiated flights to 18 domestic airports. To commemorate the 70th anniversary of the Dien Bien victory, the airline introduced flights from Ho Chi Minh City and Hanoi to Dien Bien, aiming to facilitate not only tourism but also the socioeconomic development of the nation. “Currently, Vietjet offers a diverse range of products catering to the general public, premium passengers, and specific segments, introducing innovative options such as fly now, pay later, and installment payment plans for tickets,” Mr. Toan elaborated.
Addressing the factors contributing to the surge in airfares, Mr. Toan identified five primary reasons. Firstly, the shortage of aircraft and replacement parts resulted from supply chain disruptions following the Covid-19 pandemic. Aircraft engine manufacturers required airlines to send their planes for repairs, leading to a reduction of 15–20% in the operational fleet.
Secondly, fuel costs, which account for 40–50% of an airline’s operating expenses, have risen sharply, with gasoline prices increasing by 20–25%. Additionally, there is mounting pressure to transition to environmentally friendly fuels. Specifically, by 2025, airlines must align with global standards for zero-carbon emissions, necessitating adjustments that drive up costs.
Thirdly, geopolitical upheavals worldwide exert pressure on airlines, given that 85% of the industry’s expenses in this region are incurred in foreign currency.
The fourth factor is the decline in the availability of highly qualified personnel for the aviation industry, and lastly, there has been a decrease in consumer spending on air travel. Since October 2023, our measurements have indicated a 15–20% drop in aviation-related expenditures.
Mr. Toan presented four proposals to alleviate the pressure on airfare prices.
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“In the past 20 years, the aviation industry has never experienced such a drastic decline in consumer spending,” emphasized Mr. Toan, assuring that airlines are dedicated to offering the most competitive fares to their customers. To bring prices down to reasonable levels that the market can accept, he suggested the following measures: Firstly, implement supportive policies to reduce taxes and fees associated with airport management and operations, thereby increasing operational efficiency. This includes reducing the turnaround time for flights, increasing flight frequencies, and enhancing overall operational capabilities, as well as decreasing service charges for nighttime flights to encourage more overnight services for passengers.
Secondly, the government and relevant authorities should consider providing assistance to businesses by waiving or reducing existing taxes and import duties on fuel. Additionally, they should encourage companies to explore and adopt alternative fuel sources to protect the environment and strive for net-zero emissions by 2050, aligning with ESG goals for sustainable development.
Thirdly, devise and execute tourism promotion strategies at the national level, leveraging the combined resources of the government, businesses, and the public, to attract more international visitors to Vietnam and encourage domestic tourism. While our airline has already undertaken substantial efforts in this regard, we recognize the need to do even more to stimulate demand. We have launched new routes, bringing in tourists from South Korea, Japan, and Taiwan to Vietnam, with a particular focus on Phu Quoc to compensate for the decline in domestic travel…
Fourthly, devise and implement consistent communication strategies to encourage consumers and tourists to resume their travel planning habits, including booking in advance, purchasing tickets directly from official channels, and staying informed about updates from the airline. This will enable them to secure competitive airfare and support the aviation industry in streamlining its operations, especially during peak travel seasons. This is a standard practice in the international aviation and tourism industries, where early booking often results in lower fares. Additionally, direct bookings through official channels eliminate intermediary costs.
With the summer peak season approaching, we are committed to finding solutions, stimulating demand, and making air travel more accessible. We pledge to maximize our production capacity, including the challenging task of sourcing additional aircraft for lease, despite the high costs involved. Through this forum, we want to assure our customers that we offer a range of low-fare options, especially for those who book in advance. We are dedicated to meeting the travel needs of our customers and contributing to the socioeconomic development of the nation, serving both domestic and international passengers,” concluded Mr. Toan.
