Vietnam lowers price ceilings on domestic airfares

Sep 15th at 14:33
15-09-2015 14:33:50+07:00

Vietnam lowers price ceilings on domestic airfares

The Vietnamese aviation watchdog announced Monday lower price caps on the airfares of domestic flights, at a time when jet fuel quotes have fallen sharply.

Air tickets in Vietnam are divided into five groups, depending on flight distance, the price caps on all of which have been lowered by an average of four percent, the Civil Aviation Authority of Vietnam (CAAV) said in a document.

Starting October 1, airfares of all domestic services will be cut by VND1.6 million-VND3.75 million a ticket, according to the CAAV.

The new price ceilings are as follows:

The distance between Ho Chi Minh City and Hanoi is 1,140km. The travel route from Hanoi and Ho Chi Minh City to the central city of Da Nang is both 604km.

Some of the below 500km services are Ho Chi Minh City – Nha Trang (319km), Ho Chi Minh City – Phu Quoc (301km), and Ho Chi Minh City – Da Lat (400km).

The price ceiling adjustments were made after jet fuel prices dropped around 4.71 percent compared to late 2014, the CAAV said.

The prices could not be slashed deeper as airlines still have to bear other rising costs, such as aircraft lease and foreign workforce wages, due to foreign exchange rate fluctuations, the aviation watchdog added.

The State Bank of Vietnam, the country’s central bank, on August 19 depreciated the dong by one percent against the U.S. dollar after doing so for two times previously, bringing the total devaluation of the local currency to three percent.

The CAAV has requested local airlines to set new airfares in accordance with the new price ceilings. The carriers are also encouraged to offer more promotional programs to create more conditions for people to travel by air.

The adjustment of the price caps on airline fares was well anticipated earlier this month, after a CAAV official asked carriers to slash ticket prices over the falling fuel costs.

In late 2014, the Ministry of Finance also lowered the ceilings on the airfares of the economy class on domestic flights from VND5,000 per passenger per kilometer to VND4,250, effective January 1 this year.

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