The Civil Aviation Authority of Vietnam has sent a proposal to the Ministry of Transport to raise several aviation service charges in order to reduce peak-hour overloads and raise money for infrastructure development.

Passengers at Noi Bai International Airport in Hanoi

Under the proposal, take-off and landing service charges at major airports, including Noi Bai and Tan Son Nhat, would be raised by 15 percent during rush hours and reduced by 15 percent during off-peak hours.

If passed, this would be the first rate differentiation imposed in Vietnam on peak and off-peak flights, which aims to make carriers adjust their schedules, especially of domestic flights, to prevent congestion during peak hours.

According to the proposal, rush hour overload at major airports was due to the rapid increases in the number of domestic flights.

Statistics show that the number of take-offs and landings of domestic flights in 2016 increased by 25 percent over the previous year and were 2.4 times higher than those of international flights.

The aviation authority pointed out that the service charges of domestic flights had been kept stable since 2011 and were only equivalent to 46-67 percent of the ASEAN average, adding that increases were necessary to make up for growing maintenance and repair costs and to have funds for new investments.

“The increases are necessary and reasonable in order to have funds for reinvestment in infrastructure development,” Lai Xuan Thanh, Director of the Civil Aviation Authority of Vietnam, was quoted as saying by local newspaper. 

However, the authority would require carriers to maintain their ceiling flight ticket prices.

To ease the impact on the operation of carriers, the take-off and landing service charges would be raised in two stages - 5 percent from July 1, 2017 and another 10 percent from January 1, 2018.

Le Manh Hung, General Director of the Airports Corporation of Vietnam (ACV) which operates 22 airports across the country, was quoted by the online newspaper vnexpress.net as saying that the service charges for domestic flights must be increased by 225 percent to reach the break-even point and 258 percent to have a profit of 10 percent.

According to Nguyen Thien Tong, former head of the HCM City University of Technology’s Department of Aviation, said raising rush hour charges would be efficient to draw passengers to off-peak flights due to lower fares.

The Civil Aviation Authority is also proposing a hike in security charges of 0.5 USD per passenger for international flights, and 18,181 VND (0.9 cents) per passenger for domestic flights - double the current charge.

The aviation authority said that the security charges in Vietnam were still lower than in other countries, such as 6 USD in Singapore, 6.5 USD in Myanmar and 3 USD in Cambodia.

A hike of 40,000 VND in passenger service charges is also being proposed, raising them to 90,909 VND for arrivals and departures at type A airports, and 72,727 VND at type B airports. The increase is explained by the upgrading of many airports and passenger service quality.

According to ACV’s estimates, if all proposals are approved, carriers would have to pay an extra 143 billion VND per year, equivalent to 5,188 VND per passenger (23 cents, accounting for 0.11 percent of the average airline tickets). The change will be too minor for carriers to have to adjust their fares, ACV said.

VNA