Airfares soar, but no rule violations: Vietnam aviation authority

Increased airfares in the country remain within the price bracket and in accordance with regulations, the Civil Aviation Authority of Vietnam (CAAV) has concluded.

The conclusion is made in a report that it has submitted to the Ministry of Transport after carrying out an inspection of ticket sales between January 1 and May 4 this year.

The May 7-9 inspection covered sales by Vietnam Airlines, VietJet Air, Bamboo Airways, Vietravel Airlines and major agents.

The report says that all four carriers have managed their pricing within the transportation service price range set by the transport ministry.

It reiterates that domestic airline ticket prices have consistently stayed within the price range allowed by current regulations.

While 11 email petitions on high-priced tickets had been received as of May 10, the CAAV found "no cases" of tickets being sold beyond the price range as prescribed in circulars 17 and 34.

In an earlier report on airfares in the first four months of the year, the CAAV had affirmed that the increase in air ticket prices by Vietnamese carriers was consistent with the global trend.

It attributed the increase to high fuel prices, exchange rate discrepancies, recall of engines by aircraft manufacturer Pratt & Whitney, increased aircraft rentals, and the function of supply and demand in air transport.

The supply-demand mismatch is likely to persist during the peak summer season this year, exerting pressure on fares to tourist and resort destinations, the report said.

While the number of high-priced segments have increased on major airline routes – Hanoi- HCMC, Hanoi-Danang and HCMC-Danang, the CAAV reported that the bulk (60-70%) of airline tickets sold were in the low and intermediate categories. "The high-priced segment ticket range accounts for a small proportion,” it emphasized.

With national carrier Vietnam Airlines, the high-cost segment range has expanded compared to the same period in 2023. The greatest increase in the proportion of high-priced tickets has been on the carrier’s HCMC-Phu Quoc route, accounting for 52.8%, compared to just 32.4% in the same period last year.

With Bamboo Airways's Hanoi-Danang route, this increased from 15.4% to 26.1%. Vietravel Airlines's high-cost segment increased the most on the Ha Noi-Danang route, from 9.4% in 2023 to 22% this year.

Basic economy class ticket costs on internal routes also increased during the April 30-May 1 holiday, particularly on the Hanoi-HCMC, Hanoi-Danang and HCMC-Danang. The increase varied between 40% and 2.1%.

The CAAV report said carriers fix their selling prices based on several factors including market availability and demand, as well as the time of sale, with fares increasing closer to the time of each flight.

However, the total selling price and system administration charge should not exceed VND4 million ($157), which is the regulatory ceiling for domestic air tickets (excluding VAT and other fees). This ceiling applies to the longest domestic trips of 1,280 km or above, like the Hanoi-Phu Quoc route, beginning March 1 this year.

Domestic carriers have complied with listing requirements, the CAAV report said, but noted that information displayed on airline websites was inconsistent and created confusion and uncertainty among passengers regarding specific amounts payable in fare structure.

At a recent working session, the CAAV requested the four domestic carriers to change the way information is shown, clarifying constituent items included in the displayed ticket price. It said it will work with the carriers to standardize presentation methods and offer clear and comprehensive information.

It has been reported that Vietnamese carriers transported 13 million passengers in Q1/2024, down 5% year-on-year. The number of domestic travelers fell 18% to 8.5 million.