The Civil Aviation Authority of Vietnam has sent a proposal to the Ministry of Transport to raise several aviation service charges in order to reduce peak-hour overloads and raise money for infrastructure development.
Under the proposal, take-off and landing service charges at major airports, including Noi Bai and Tan Son Nhat, would be raised by 15% during rush hours and reduced by 15% during off-peak hours.
If passed, this would be the first rate differentiation imposed in Vietnam on peak and off-peak flights, which aims to make carriers adjust their schedules, especially of domestic flights, to prevent congestion during peak hours.
According to the proposal, rush hour overload at major airports was due to the rapid increases in the number of domestic flights.
Statistics show that the number of take-offs and landings of domestic flights in 2016 increased by 25% over the previous year and were 2.4 times higher than those of international flights.
The aviation authority pointed out that the service charges of domestic flights had been kept stable since 2011 and were only equivalent to 46%-67% of the ASEAN average, adding that increases were necessary to make up for growing maintenance and repair costs and to have funds for new investments.
“The increases are necessary and reasonable in order to have funds for reinvestment in infrastructure development,” Lại Xuân Thanh, Director of the Civil Aviation Authority of Vietnam, was quoted as saying by local newspaper. However, the authority would require carriers to maintain their ceiling flight ticket prices.
To ease the impact on the operation of carriers, the take-off and landing service charges would be raised in two stages - 5% from July 1, 2017 and another 10% from January 1, 2018.
Le Manh Hung, general director of the Airports Corporation of Vietnam (ACV) which operates 22 airports across the country, was quoted by the online newspaper vnexpress.net as saying that the service charges for domestic flights must be increased by 225% to reach the break-even point and 258% to have a profit of 10%.
According to Nguyen Thien Tong, former head of the HCM City University of Technology’s Department of Aviation, said raising rush hour charges would be efficient to draw passengers to off-peak flights due to lower fares.
The Civil Aviation Authority is also proposing a hike in security charges of US$0.5 per passenger for international flights, and VND18,181 (0.9 cents) per passenger for domestic flights - double the current charge.
The aviation authority said that the security charges in Vietnam were still lower than in other countries, such as US$6 in Singapore, US$6.5 in Myanmar and US$3 in Cambodia.
A hike of VND40,000 in passenger service charges is also being proposed, raising them to VND90,909 for arrivals and departures at type A airports, and VND72,727 at type B airports. The increase is explained by the upgrading of many airports and passenger service quality.
According to ACV’s estimates, if all proposals are approved, carriers would have to pay an extra VND143 billion per year, equivalent to VND5,188 per passenger (23 cents, accounting for 0.11% of the average airline tickets). The change will be too minor for carriers to have to adjust their fares, ACV said.