Air ticket prices under scrutiny

Regulating the market: An airplane flies over commuters on a street in Ho Chi Minh City. Mixed opinions have arisen from the proposal to lift the ceiling prices of airline tickets in the country. — AFP

HANOI: The Finance Ministry is urging the Transport Ministry to have detailed evaluations about the proposal of lifting the ceiling price for air tickets.

The Finance Ministry recently wrote to the Vietnam Civil Aviation Authority of Vietnam, Vietnam Register, departments of finance and transport under the Transport Ministry with regard to the proposal of lifting the ceiling price, the Finance Ministry said that civil aviation services and airfares were under the management of the Transport Ministry.

According to the Finance Ministry’s Price Management Department, during the compilation of the amended Law on Price, the department received the proposal of removing domestic airfare ceiling from Vietnam Aviation Business Association, Vietnam Airlines and Bamboo Airways.

The department said that the established Law on Civil Aviation stipulates that airlines decide on prices of domestic air transportation services within the framework set by the Transport Ministry and was in charge of declaring prices with the Transport Ministry.

Accordingly, the Finance Ministry urged the Transport Ministry to have detailed proposals coupled with assessments of the impacts of lifting the ceiling prices of domestic air tickets.

At the meeting about the draft amended Law on Price in late April, the proposal of lifting the domestic ceiling price was also raised.

Under the current bracket, airfares were capped at 1.6 million dong (US$63 or RM303) for routes below 500km and playing an important role in socio-economic development, 1.7 million dong (RM322) for other routes below 500km.

It was also capped at 2.2 million dong (RM416) for routes of between 500km to 800km, 2.79 million dong (RM528) for routes of between 850km to 1,000km, 3.2 million dong (RM606) for 1,000km to 1,280km and 3.75 million dong (RM710) for routes over 1,280km.

These prices did not include value-added tax and airport services fees.

Mixed opinions have arisen from the proposal of lifting the ceiling prices.

Some said that the ceiling prices should be kept as a base for the management agency to regulate the market and ensure the rights of customers.

Meanwhile, some said that the existence of ceiling prices was inhibiting the growth of the domestic air transport market.

Luong Hoai Nam, an industry insider, said that airline ticket prices should be decided based on the market economy principle.

The ceiling price was stealing the opportunity of improving the financial capacity of carriers.

Tran Tho Dat, chairman of the Academic Board of the National Economics University, said that currently, only a few countries imposed ceiling and floor prices for airfares.

Removing the ceiling prices was necessary but an appropriate pricing mechanism should be tabled instead to ensure healthy competition, transparency and the stable, long-term and sustainable development of the aviation market as well as the rights of passengers. — Viet Nam News/ANN

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