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Vietnam still cannot float the aviation market
Vietnam will still not be able to float the airfares until the monopoly still exists in the market, the Civil Aviation Authority of Vietnam CAAV has affirmed.
The principle has been affirmed by CAAV when it explains the mechanism on the management over the airfares applied for passenger carrying on domestic air routes which have been set up by the Ministry of Finance.
It was not by chance that CAAV, for the first time, had to organize a press conference to announce the Decision No 2967 on the airfares applied to the flights on the domestic air routes promulgated last week.
The new decision on the ceiling airfares was made at the moment, which is considered “sensitive”, when the 2012 Tet season nears. Especially, the new airfare management mechanism stipulates a wide range of airfares and a completely new price management solution
Under the new decision, the ceiling airfare for economy class tickets on domestic air routes is 5000 dong per kilometer per passenger, not including value added tax VAT. However, from January 1, 2012, air carriers will have the right to sell air tickets at 3000 dong per kilometers of flight at maximum.
Regarding the airfare management mechanism, the Ministry of Finance allows CAAV to issue legal documents to set up the airfares to be applied to air carriers, ensuring that the airfares are suitable to different periods
“The adjustments in different periods are necessary to ensure the benefits of passengers, because the monopoly still exists in the market, since there is an airline that holds more than 70 percent of the market share,” said Luu Thanh Binh, Deputy Head of CAAV.
“Only when the monopoly terminates, and the aviation market becomes really competitive, will the airfare be floated, and airlines will have the right to define their airfares themselves,” Binh added.
Right after the Ministry of Finance released the decision on raising the airfares, the national flag air carrier Vietnam Airlines has announced that its airfares would increase by 20 percent at maximum from the current levels, and that the new airfares would be applied as of December 15, 2011.
Vietnam Airlines’ General Director Pham Ngoc Minh has said that though the ceiling airfare has been lifted, Vietnam Airlines does not intend to increase the airfares too sharply on the Tet season, in order to share difficulties with passengers.
Minh said that Vietnam Airlines would continue selling tickets at competitive prices, many of which would have the prices lower by 50 percent than the ceiling levels. Vietnam Airlines would offer 10 different airfare levels for domestic flights. For example, on the Hanoi-HCM City air route, the highest airfare for economy class tickets would be 2,560,000 dong, but passengers can seek to buy tickets at 1,050,000 dong only, depending on the booking time.
Meanwhile, Air Mekong and Jetstar Pacific, and Vietjet Air have not made any moves following the decision to lift the airfares made by the Ministry of Finance – the long awaiting decision.
Nguyen Tien Thoa, Director of the Price Control Department under the Ministry of Finance, has said that the ministry made the decision after considering the audited business costs in 2010 and the business costs in 2011 (with consideration of the price slippage) of Vietnam Airlines, which is holding the biggest market share on the domestic market.
Meanwhile, the ceiling airfare increases have caused a shock to many travelers. A lot of readers have emailed the editorial board, complaining that the new ceiling airfares are unaffordable to them. Meanwhile, travel firms all have complained that the high airfares would keep travelers away.
vietnamnet
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