VietNamNet Bridge - Air carriers are considering raising airfares after the government raised the environment surcharge from VND1,000 to VND3,000 for every liter of petrol.




Duong Tri Thanh, deputy general director of Vietnam Airlines, the national flag air carrier, mentioned the environment surcharge increase at a recent press conference.

Thanh said with the surcharge increasing by threefold, Vietnam Airlines would have to pay VND750 billion more for the environment fee. 

The figure would be VND150 billion for Jetstar Pacific and VND350-400 billion for Vietjet Air, a private carrier. 

Any input cost increase, according to Thanh, would seriously affect air carriers’ business, because aviation is not a highly profitable business field. 

“Vietjet Air has reported profits, but we believe it is still facing big difficulties,” he said.

Thanh proposed that the Civil Aviation Authority of Vietnam (CAAV) and the Ministry of Transport report the problem to the government, so that the government can ask the Ministry of Finance to make “reasonable adjustments”.

He suggested that the environment surcharge be counted when calculating the airfare.

Jetstar Pacific agreed with Vietnam Airlines, saying that it was necessary to reconsider the airfares as different kinds of taxes and fees had placed a heavy burden on air carriers.

Ta Huu Thanh, a senior executive of Jetstar Pacific, said the air petrol price fell sharply in the first three months of 2015 to $70 per barrel, but the import tariff was raised to 25 percent. 

As such, the benefit from the fuel price decrease cannot offset the higher costs of tax and environment fee increases.

Thanh asked to maintain the 7 percent tax rate on air fuel and not impose an environment tax on air carriers.

The air carriers’ complaints have been criticized by the public. 

“They (airlines) do not intend to reduce the airfares even though the oil price has been falling sharply. But they always threaten to raise the airfares when service fees increase,” the director of a trading company in Hanoi said.

Thanh of Vietnam Airlines also said the oil price fall is good news for air carriers, because this helps reduce operation costs, and that JetA1 has also seen prices fall.

Analysts noted that the expenditure on air fuel accounts for 37-38 percent of the airlines’ total operation costs.

However, when asked when they would reduce the airfare, they said they still need to consider the situation.

In related news, after the government decided to raise the environment fee, petrol distributors raised the retail price of A92 petrol by VND1,600 per liter.