Higher environmental tax among challenges facing Vietnam airlines
Higher environmental tax among challenges facing Vietnam airlines
Vietnamese air carriers pinpointed many difficulties that are hindering their operations, including a higher environmental tax on fuel, as they met with the country’s aviation watchdog on Thursday.
The Civil Aviation Authority of Vietnam (CAAV) held the Hanoi meeting to listen to the carriers in the hope of finding possible resolutions to their problems.
Duong Tri Thanh, deputy general director of national flag carrier Vietnam Airlines, said the new environmental tax, which will triple starting in May, will result in a VND740 billion (US$34.49 million) cost overrun for the company from now to the end of this year.
Budget carriers Jetstar Pacific Airlines and VietJet Air too will incur extra expenses of VND150 billion ($6.99 million) and up to VND400 billion ($18.64 million) due to the new tax, respectively, Thanh added.
On March 10, the Standing Committee of the National Assembly passed a resolution to increase the tax to VND3,000 a liter from VND1,000 a liter for gasoline and jet fuel.
The 200-percent tax hike is said to help offset about 84 percent of the loss to be caused by a cut in tariffs on gasoline imports for the state budget, Dinh Nam Thang, deputy director of the Tax Policy Department under the Ministry of Finance, told Tuoi Tre (Youth) newspaper earlier this month.
The Vietnam Airlines official thus called on the CAAV and the Ministry of Transport to petition the government to issue a “suitable policy” to assist the airlines.
“The environmental tax should be considered as a surcharge which should be allowed to be counted in the airfare calculation,” he suggested.
Thanh also talked of another issue which he said has been hindering many Vietnamese airlines when it comes to overseas services.
“We are facing problems in asking for departure slots from airports of other countries,” he said.
Vietnam Airlines has only been licensed to offer five flights per week from the Beijing Capital International Airport for the last 20 years, according to the official.
“We want to launch two more flights for the service but this requires a proposal from higher Vietnamese authorities, and the issue has remained unsolved for years,” he added.
Thanh said Vietnam has created conditions to facilitate Chinese airlines in their services to the country, so “there must be a policy” to ensure that Vietnamese carriers will be treated the same when flying to China.
“China only provided slots for Vietnam Airlines to depart at 1:00 am or 4:00 am so it is difficult to exploit the service,” he lamented.
Nguyen Duc Tam, deputy general director of no-frills VietJet Air, said the airline’s business results and sustainable development are hurt by the high loss ratio in pumping fuel, which is carried out by Vinapco, a Vietnam Airlines subsidiary.
Vinapco is refilling fuel for VietJet Air planes at an average loss ratio of two percent, which costs the carrier VND120 billion ($5.59 million) a year, Tam elaborated.
“The CAAV and Vietnam Airlines must be aggressive in handling this issue,” he urged.
Tam also called on the companies that supply in-flight meals at Noi Bai International Airport and Da Nang International Airport to diversify their menus and cut production costs to better serve passengers.
For Hai Au Aviation, which operates seaplanes for tourism purposes, open and convenient policies, regulations and mechanisms to facilitate the service are what the company most desires.
The lack of relevant policies has prevented the Hanoi-based aviation firm from launching more services, general director Luong Hoai Nam told the meeting.
Hai Au Aviation has been licensed to offer only two services, Hanoi – Ha Long and Ho Chi Minh City – Phan Thiet, since it began operations in September last year.
“We have reached an agreement to buy 20 more seaplanes over five years but have had to delay delivery to wait for the policies,” he said. “We do not risk taking the aircraft home and seeing them lie dormant for not being allowed to fly.”
