Vietnam airlines refuse to cut fares despite cheaper fuel, bigger revenue
Vietnam’s transport minister has called for lower airfares to match a sharp decline in fuel costs, but carriers say their tickets are already affordable.
At a meeting on January 4, Minister Dinh La Thang asked that Vietnam Airlines make its tickets cheaper after the national carrier reported a whopping 129% increase in consolidated revenues, to VND70 trillion (US$3.12 billion) in 2015, and a pretax profit of more than VND1.4 trillion (US$62.3 million).
“With such profits, the airline should cut fares for the sake of passengers,” Thang said, as cited by Tuoi Tre newspaper.
He noted that the price of jet fuel A1 in Asia in December dropped to less than US$48 a barrel, down 40% year-on-year.
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| Passengers board a Vietnam Airlines flight at Tan Son Nhat International Airport in Ho Chi Minh City. Photo: Dao Ngoc Thach |
Local carriers said they have already cut fares by offering various discounts for domestic routes, allowing many people to fly at the same price of a bus ticket.
Pham Ngoc Minh, general director of Vietnam Airlines, said the domestic air travel market expanded to more than 40 million passengers in 2015 mostly because local carriers managed to win customers from bus services.
Lai Xuan Thanh, director of the Civil Aviation Administration of Vietnam, said it can only encourage airlines to lower their fares, instead of forcing them to do so.
He said the maximum domestic airfares are still 20% lower than the caps set by the agency last October.
Local carriers also said they have had to deal with bigger expenses from aircraft rental and purchases and foreign staff’s salaries due to a stronger dollar.
Fuel import tariffs and environment fees have also been raised, they said.