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Vietnam Airlines may hike fares
The Civil Aviation Authority of Viet Nam has recommended a 20 per cent increase in ceiling fares on domestic routes, citing the depreciation of the dong and fuel price hikes.
Lao Dong (Labour) newspaper said Vietnam Airlines was the first carrier to ask for a hike after the State Bank of Viet Nam's decision to allow the greenback to appreciate by 9 per cent last month.
Pham Ngoc Minh, general director of Viet Nam Airlines, said airlines had to pay 70 per cent of their costs, including for fuel, aircraft leasing, and pilots' salaries, in foreign currency, and these have now risen sharply.
As a result of not being allowed to increase fares or collect fares for domestic flights in foreign currencies, carriers have been forced to pick up the extra tab.
Minh said Viet Nam Airlines incurred a loss of US$30 million on domestic flights last year.
Ta Huu Thanh, Deputy General Director of Jestar Pacific Airlines, said the carrier had fixed its fares when the exchange rate stood at VND18,465 per dollar. Now the exchange rate is VND20,850.
For Jestar Pacific, fuel expenses account for 45 per cent of revenue from airfares.
Other expenses had also risen due to high inflation, he said.
The carrier's fares now stand at US$35 per flying hour per passenger compared with some $60 in Thailand and $75 in Malaysia.
It wanted a fare hike of 25 per cent to avoid losses, Thanh added.
Doan Quoc Viet, Chairman of Mekong Air, said fuel costs accounted for 50 – 60 per cent of revenue from airfares while the exchange rate adjustment had increased expenses by 13 – 14 per cent. Mekong Air had sought a fare increase of 20 to 50 per cent so that it could earn 2 to 3 per cent profits to remain operational, he added.
CAAV deputy general director Luu Thanh Binh said the carriers' demands were "reasonable" since current fares were likely to cause losses.
But in the current situation, with the country already grappling with inflation, a 20 per cent increase in air fares would be more reasonable, he added.
Tran Ngoc Thanh, Head of the Ministry of Transport's Transportation Department, said the hike must be approved by Prime Minister Nguyen Tan Dung.
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