Flying could become cheap again as authorities vow to reduce taxes

Speaking at a seminar last Friday on decreasing domestic airfares, Đỗ Hồng Cẩm, deputy director of the Civil Aviation Authority of Vietnam (CAAV), admitted domestic airfares have risen by 15-20 per cent this year.

But they have been “within the limits set by authorities,” he said.

He blamed the hikes on various factors such as rising fuel prices, exchange rate fluctuations, engine recalls, aircraft lease costs, and increased demand for air travel.

There are public complaints about fare rises due to taxes and fees, but the finance ministry has rejected them.

Airlines are required to pay multiple fees for security screening, flight operation services, takeoff and landing, and others.

After three years of the COVID-19 pandemic they continue to face financial challenges, and so are unable to lower ticket prices, according to airlines representatives.

Speakers at a seminar on reducing domestic airfare last Friday. — VNS Photo Bồ Xuân Hiệp

Đặng Anh Tuấn, deputy general director of Vietnam Airlines, said: “Carriers only make a slim profit of US$1 per passenger under current market conditions.”

Another factor contributing to the high airfares is the severe shortage of aircraft, reducing the supply of seats.

Vietnamese airlines only have 160-170 operational aircraft, a significant decrease from 2023, they added.

Vietnam Airlines and Vietjet have grounded several planes with engine issues, while Bamboo Airways has reduced its fleet from 30 to five.

Pacific Airlines has temporarily halted operations after returning all its leased aircraft.

High fuel prices and a sharp appreciation of the dollar are also affecting airlines’ operations.

Trương Việt Cường, deputy general director of Bamboo Airways, said the aviation industry had been severely hit since the pandemic broke out in early 2020, and still had to carry out salary cuts and contract terminations.

Nguyễn Quốc Kỳ, chairman of Vietravel Airlines, said airlines were bleeding money on flight operations, and only making profits from other activities.

Several airlines managed to make profits in the first quarter.

A screenshot showing the reservation information for a one-way ticket on low-cost carrier Vietjet Air from Hà Nội to Phú Quốc in September, 2024. — VNS Photo Bồ Xuân Hiệp

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In order to address the issues, airlines want the Government to reduce fees related to flight operations, takeoff and landing, and fuel imports, and waive overnight landing fees.

Đỗ Hồng Cẩm, deputy director of CAAV, said the agency would consider a 50 per cent reduction in these fees and revising fare caps to promote affordable air travel and prevent monopolies.

The recent spike in airfares, particularly on popular routes such as Hà Nội – HCM City and Hà Nội – Phú Quốc, has caused concern among the public and impacted tourism.

Several airlines, including Vietnam Airlines and Vietjet Air, are offering free tickets and discounts on popular routes for the end of the year.

Analysts however expect fares to rise further, not only in Việt Nam but also globally, due to factors such as high demand, fluctuating fuel prices and exchange rate volatility.

They say airlines are also striving to recover financially after experiencing significant losses during the pandemic.

Local airlines carried 13 million passengers in the first quarter of the year, slightly fewer than in the same period last year.