Bamboo Airways has announced that will stop flying the Hanoi – Con Dao Island route in April because its receipts are not high enough to cover expenses. Vinh said the ceiling airfare regulation has remained a headache for airlines. Other air carriers have also incurred losses for some routes because they cannot raise airfares.

“Regarding the suspension of flights from Hanoi to Con Dao, I think there are many reasons behind the air carrier’s losses, not just airfares. However, the ceiling airfare scheme has made their situation serious as they don’t have a solution to settle the problem," Vinh said.

State management agencies imposed a cap on airfares to keep Vietnam’s air transport competitive with other means of transport.

Asked about solutions, Vinh said that unprofitable air routes needed for local development should enjoy a subsidy from state or local budgets. He said agencies need to calculate the benefits of all involved parties and consider all the possible aspects.

For example, Con Dao is a famous attraction and spiritual destination. The benefits from attracting travelers must be revenue from means of transport and hotel and entertainment services, and other sources of revenue. 

To subsidize the air route to Con Dao, ground services and tourism products on the island are needed.

Air carriers have repeatedly proposed removing the ceiling airfare scheme. The Ministry of Finance in May 2023 said the issue is under the jurisdiction of the Ministry of Transport.

Vinh believes the ceiling airfare should be maintained but be more flexible. Ceiling airfares should be applied to busy commercial air routes and not to less common routes.

Nguyen Quoc