The current price ceiling makes it difficult for airlines to diversify their prices, increase profits during certain periods of time like peak seasons, and in turn lower prices on some routes, Le Hong Ha, Deputy General Director of Vietnam Airlines, said at a recent tourism forum.
Vietnam should abolish the domestic price ceiling, and allow market forces to decide prices. "The aviation market is already operating like a free market, so airlines should be allowed to freely adjust prices based on supply and demand," Ha said.
The Civil Aviation Authority of Vietnam (CAAV) supports the proposal, as Vietnam is one of the few countries in the world still having a price cap, said Vo Huy Cuong, deputy head of the authority.
The CAAV has proposed removal of the price cap every time amendments or supplements are made to the Civil Aviation Law, but these were not approved because the National Assembly felt it was necessary to protect the interest of many classes of civilians travelling by air, he said.
If this regulation is not amended, airlines will focus on operating and developing international routes rather than domestic ones, he added.
In mid-2018, many airlines requested the government to raise domestic price caps because they were losing money on many routes after cost of fuel and labor increased, but this was not approved either.
Currently, air tickets on routes under 500 km operated to promote socio-economic development have a maximum price of VND1.6 million ($69), ordinary routes under 500 km VND2.2 million ($95), while the highest ceiling is VND3.75 million ($162) for routes of 1,280 km or above.
According to the government portal, the air distance between the northernmost point of Vietnam to the southernmost point is 1,650 km.
Local airlines served 50.3 million passengers from January to November, up 10.7 percent year-on-year, according to the General Statistics Office.