Updated  
January, 20 2014 09:01:49

Vietnam Airlines to cut fares

Compiled by Le Hung Vong

Vietnam Airlines, which has announced a pre-tax profit of VND533 billion (US$25.3 million) for 2013, said it would cut fares since it is faced with tough competition.

In a press release the carrier said despite the difficult global economic situation its profits exceeded the target by 34 per cent.

Its revenues were VND72.6 trillion ($3.4 billion).

The airline transported 15 million passengers at a flight load factor of 79.5 per cent, its highest ever.

Among the difficulties it faced last year were lower demand for air travel and a depreciation of certain currencies like the Japanese yen and Australian dollar against the US dollar, affecting revenues.

In an online conference organised by the Ministry of Transport on January 9, Pham Viet Thanh, chairman of Vietnam Airlines, said the carrier suffered negative impacts last year as Middle Eastern airlines began to fly on many routes, exerting great pressure on European and Asian airlines. As a result, some European airlines have suspended services to Viet Nam.

In the domestic market, low-cost air carriers have expanded their services and fleets, making the competition more intense, Thanh said.

It would seek to cut costs to compete with local and international airlines, Thanh said.

The airline is also set to start the equitisation process this year and streamline its workforce to cut costs while hoping that the global economic situation will improve in 2014, helping boost travel demand.

The International Air Transport Association (IATA) has forecast the global aviation sector to continue to grow in the next five years.

China biggest rice buyer

China, the biggest market for Vietnamese rice in the last two years, will retain the position in 2014, according to the Viet Nam Food Association (VFA).

China bought 2 million tonnes last year, or almost a third of the 6.6 million tonnes Viet Nam exported.

In addition, some 1.5 million tonnes of rice was sold to the neighbouring country through small-volume border trade channels.

With a population of 1.3 billion people, the Chinese market remains risky for Vietnamese rice, VFA has noted.

Up to 54 per cent of the export quotes of 2 million tosnnes to China were cancelled, according to Truong Thanh Phong, Chairman of VFA.

Since 2012 the VFA has been exhorting its members to think twice before signing rice export contracts with China since they could be cancelled if prices fluctuate. The border trade is also risky because Chinese buyers could easily refuse to pay for their purchase, it said.

In other cases, rice prices in the local market could be higher than in the global market when large volumes of local rice were carried to the northern border (for exports to China).

Nguyen Van Tien, director of An Giang-headquartered Angimex, said border trade plays an important role in rice exports, especially when rice exports face fierce competition from other countries. Importers could prefer border trade since it does not require import quotas and they do not have to pay tax, he said.

An increase in volumes in border trade would hinder official exports as rice prices at borders are higher than in the local market.

If the situation is not carefully monitored, it could affect prices of the grain in the local market, many exporters warned at a VFA meeting held last week to review the rice market in 2013.

Poor management of the border rice trade also enabled tax evasion in the two countries. According to customs figures, of the 1.5 million tonnes sold through the border last year, on only 400,000 tonnes was tax paid. There is also the risk of fraud in VAT refund.

Bangkok tours suspended

Vietnamese travel agencies have suspended tours to Bangkok as Thai anti-government demonstrators on Monday started blocking important traffic points in the capital.

Last Monday, a number of HCM City – based travel agencies said they had no visitors touring Bangkok and that the tours are being suspended temporarily.

Saigontourist Travel Service Company said the last group of customers completed their tour programme in Bangkok and returned. The travel agency used to offer daily tours to Thailand, but has suspended them now.

Lai Huu Phuong, manager of Ben Thanh Tourist, said on January 13 that the firm has stopped selling tours to Thailand. He added that tours already sold could be cancelled if the situation worsens in Thailand.

Nguyen Minh Man, communications director of Vietravel, said the company has cancelled tours to Thailand since January 10, but everyone who left before that date are safe in Bangkok.

"Vietravel has a rep office in Thailand and information about the situation is updated regularly. The areas and streets frequented by Vietravel's customers are normal," Man said.

Other HCM City-based travel agencies are also watching the situation in Bangkok. A number of them have suspended tours as of last weekend and even stopped selling Tet (the Lunar New Year) tours to Thailand.

The political upheaval in Thailand, one of the major destinations for Vietnamese tourists, has caused serious losses to Vietnamese travel agencies.

Ben Thanh Tourist takes some 100,000 tourists to Thailand every year, and Phuong said the company is taking a hit. Ben Thanh has to organise tours to other countries or refund the money to customers, he said, adding air tickets and hotel rooms (in Thailand) have been booked.

Meanwhile, a number of Viet Nam – based carriers flying to Thailand said they continued to operate flights to the country last week.

A representative of low-cost airline VietJetAir said last Monday that its flights from Viet Nam to Thailand operated as usual.

There was a decline in demand, the representative said without disclosing specific numbers. Vietnam Airlines said that its flights are operating normally and that it would inform passengers id there are any changes. — VNS



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