The price brackets for air services would be raised by 3.75% on average compared to the current prices, according to a report from the Ministry of Finance at the Price Regulation Steering Committee meeting with Deputy Prime Minister Le Minh Khai on March 24.

The routes of 1,280 kilometers and above will see the highest increase of 6.67% in airfare caps to VND4 million at the maximum.

The airfare cap hikes of 6.25% and 6.67% will be applied for the Hanoi-HCMC and Hanoi-Phu Quoc routes, respectively.

Meanwhile, the airfare caps on the under-500-kilometer routes such as HCMC-Dalat and Hanoi-Vinh will remain unchanged.

The hikes in the airfare caps may cause the CPI to rise by 0.07 percentage point this year, according to the Ministry of Finance.

A report from the Civil Aviation Authority of Vietnam shows that fuel costs typically account for about 39.5% of the total expenses of airlines.

However, airlines’ fuel costs in November 2022 surged by over 80% compared to September 2015, along with the strong rise of the U.S. dollar against the Vietnamese dong currency, contributing to an overall increase of nearly 33.5% in total business expenses.

The current airfare caps have been in place under Circular 53, issued in 2019 by the Ministry of Transport. The most recent adjustment was made in 2015.

The Civil Aviation Authority of Vietnam also proposed removing the airfare caps on routes operated by three or more airlines in 2021 to increase competition in service quality.

Source: Saigon Times