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Aircraft fuel price reaches 8-year high

The continued air petrol price increase has caused headaches to air carriers. Airfares change from day to day.

Airfare increases are a hot topic of discussion on aviation and tourism forums. Along with the strong recovery of the tourism market after the pandemic, airfares for flights to tourism attractions have also bounced back.

On online air ticket booking websites, Vietnam Airlines return tickets for Hanoi-Da Nang flights are offered at VND3-5 million, including taxes and fees. The prices are nearly the same as Bamboo Airways – VND3-4 million, depending on number of flight hour. Vietjet Air has raised its airfare, but its airfares are still lower than Vietnam Airlines and Bamboo Airways.

As for the Hanoi-Phu Quoc route, the airfares of Vietnam Airlines and Bamboo Airways range from VND4 million for a pair of round-trip tickets. Vietnam Airlines’ lowest rate for night flights is VND2 million. Even if choosing to fly at an inconvenient time, passengers would still have to pay no less than VND5 million for a pair of return tickets.

Meanwhile, to fly with Vietjet Air, passengers would have to pay VND3-7 million for return tickets.

The highest airfare in the market is the one set by Vietnam Airlines – VND11 million for a pair of return tickets. The figures are VND10 million for Bamboo Airways and VND7 million for Vietjet Air.

The airfares in summer are changing daily and weekly in accordance with the crude oil and petroleum prices in the world. The airfares have increased by twofold compared with earlier this year and the whole year of 2021, but they are still lower than the world’s prices.

Explaining this, experts saying the air fuel price has been increasing since July 2014. The prices have reached 8-year highs.

The petrol price has been rising over the last seven review periods. With the latest petrol price adjustments, E5RON92 petrol is at VND31,300 per liter (an increase of VND190 per liter), while RON95-III is VND32,870 per liter (+ VND500). Meanwhile, diesel is now priced at VND30,010 (+ VND990), kerosene VND28,780 (+ 950) and mazut VND20,730 per kilogram (+ VND380).

The other reason behind the airfare increases is the high travel demand. People rush to travel after a long period of staying at home under lockdowns. With the socio-economic recovery, the number of domestic travelers in the first five months of the year increased by 243 percent over the same period last year to 48.6 million.

Nguyen Trung Khanh, Director General of the Vietnam National Administration of Tourism (VNAT), said Vietnam strives to receive 5 million international travelers this year and serve 60 million domestic travelers. The total revenue from tourism is expected to reach VND400 trillion.

The high travel demand makes the air tickets for flights to famous destinations such as Phu Quoc, Quy Nhon, Da Nang and Nha Trang more expensive. It is expected that the airfares would continue rising.

Airlines face big problems

The air petrol price hike has affected people and businesses, including air carriers and upset their plans.

Vietjet Air, for example, plans to carry 20 million passengers this year, and restore domestic and international air routes to serve people’s travel and trade.

The private air carrier has built a business plan for 2022 based on the predicted oil price level of $80 per barrel. However, as the average oil price had reached to $130 per barrel as of March, its operation cost had increased by 28-35 percent. Meanwhile, the crude oil price had climbed to $155 per barrel as of May, the cost had increased by 48-60 percent compared with earlier this year.

The air carrier has applied a series of measures to cut costs and curb airfares, but the expenses are predicted to increase by trillions of dong this year.

A representative of Vietravel Airlines said the carrier built a business plan after the tourism market recovered based on predicted Jet-A1 prices of $83-90 per barrel. However, the air petrol price has nearly doubled the predicted level.

It is estimated that fuel expenses of the airline will increase by 25 percent compared with the average level of previous months.

Meanwhile, Vietnam Airlines said if the air petrol price stands firmly at $130 per barrel for the whole year 2022, the total expenses of the carrier will increase by VND5.7 trillion. If the air petrol price surges to $160 per barrel, additional expenses would be VND9.12 trillion.

Expenses on fuel accounts for 30-40 percent of total expenses of air carriers.

Ngoc Ha



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