Vietnam Airlines’ proposal to set floor airfares affects recovery of Vietnam tourism industry

The recent proposal of the national flag carrier to set floor prices for air tickets will affect the tourism industry which is struggling to recover, local experts said.

Vietnam Airlines’ proposal to set floor airfares affects recovery of Vietnam tourism industry. Photo: Vietnam Airlines

In Vietnam Airlines’ proposal to the Civil Aviation Authority of Vietnam (CAAV), the airline called for increasing price ceiling by up to VND250,000 (US$11) for flight distance from 500 – 1,280 km, while the minimum price for flight route of less than 500 km would be VND414,000 (US$18) and up to VND917,000 (US$40) for flights of over 1,280 km.

In another alternative, price floor suggested by the airline should be  35% of the price ceiling, ranging from VND560,000 (US$24.44) for flight of less than 500 km to VND1.4 million (US$61) for flights of over 1,280 km.

“We never sell tickets with VND0 and don’t agree with the competition by reducing air tickets. We focus on the quality of services to bring customers the best experiences,” Dang Anh Tuan, the airline’s Communications Manager, said.

“State management agencies will decide on the solutions after studying and considering the proposal,” he added.

Dr. Ngo Tri Long, a local economist, said that, in the current period, when airlines have faced difficulties due to Covid-19, the application of the floor price is not beneficial for consumers as well as does not encourage competition among local businesses. 

"The proposal goes against the Law on Price as it would leave the air travel market without competition. I think the aviation authority should only set ceiling prices and not floor ones," Long underlined.

Specifically, the competition in the market is weak as Vietnam Airlines and Vietjet Air account for more than 50%, thereby, the proposal to impose floor prices is unreasonable.

Being of the same mind, Mai Thi Thao, Deputy Director of TAT Law Firm, said that, with such the proposal, the cost of airfare would increase leading to the hike in prices of tours and other services. 

“This is not good for consumers and eliminate the competition among local airlines,” Thao said.

Currently, the CAAV has not made any decision on the proposal.