Aviation business association proposes raising domestic airfare ceiling

August 15, 2022 - 08:33
The president of the Việt Nam Aviation Business Association (VABA) has proposed to adjust the ceiling fare for domestic airlines to promote the industry's recovery.
VABA asks relevant authorities to study and adjust the domestic ceiling price bracket for airlines to promote the recovery of the industry. — Photo a family.vn

HÀ NỘI — The president of the Việt Nam Aviation Business Association (VABA) has proposed to adjust the ceiling fare for domestic airlines to promote the industry's recovery.

At a national conference between the Prime Minister and businesses last week, VABA's chairman Phạm Việt Dũng said: "Việt Nam's aviation market is growing rapidly on the recovery trend but not evenly in all segments."

The domestic market has fully recovered compared to before the pandemic. In contrast, the international market has recovered very slowly, said Dũng, mentioning domestic passenger transport increased by 12 per cent compared to 2019, global freight increased, but household goods decreased.

However, revenue was disproportionate due to increased fuel prices and some input prices, airlines still suffered losses, and liquidity did not improve much, the VABA chairman said.

"The recovery is uneven among businesses in the aviation industry, in the aviation industry supply chains, while businesses in the transport infrastructure have a strong recovery, but airlines and the passenger transport companies are still facing difficulties, having to deal with the adverse problems left by the epidemic, especially the imbalance of cash flow in the past two years," he said.

To cope with these difficulties, Dũng said aviation businesses had made important changes, especially in restructuring to adapt to new trends. All airlines also prepare quite timely for the recovery period, preparing to open new routes.

The aviation segments with high flight frequency have recovered, such as at Phú Quốc Airport with 100 flights per day, surpassing Cam Ranh Airport.

Dũng said the biggest difficulties and obstacles of aviation enterprises were the international routes as they must adjust the roundabout due to the negatively affected disputes, putting more cost on the operation of aviation.

At the same time, he said gasoline prices were high, significantly affecting businesses. Although the pandemic situation has been reduced but not eliminated, there are still potential international and domestic risks.

Dũng said many countries were still cautious in opening the sky, especially those with a large number of visitors to Việt Nam, causing the aviation market to lose many passengers and delaying the recovery of international routes.

Another factor related to the infrastructure of the aviation industry, although greatly enhanced but not completely met, there are bottlenecks in infrastructure, especially for large airports such as Tân Sơn Nhất and Nội Bài airports.

Sharing specific difficulties in his business, Nguyễn Quốc Kỳ, Chairman of Vietravel, said that air travel was exhausted in terms of labour and finance and had to be completely restored.

Kỳ said: "Transportation, especially air transportation is difficult. Fuel prices are high, sometimes accounting for over 60 per cent of the cost, the price structure applied to petrol is usually delayed after one month. Therefore, for airlines the adjustment of petrol and oil prices is also not immediate."

To deal with such problems to recover the aviation industry, VABA suggested the aviation industry and State agencies to coordinate with each other to improve the regulation, airport infrastructure, and thoroughly solving congestion at major airports.

Dũng from the VABA asked to speed up the development of aviation infrastructure and amend some documents and legal regulations related to policies of the aviation industry, including the source of socialisation of investment capital for the infrastructure of the sector.

The association asked to soon restore and promote air traffic with other countries that have a large number of visitors to Việt Nam, expand international routes, actively implement promotional programmes to improve the country's image, and attract tourists to Việt Nam.

And most importantly, it would like relevant authorities to study and adjust the domestic ceiling price bracket for airlines and continue to maintain supporting policies related to land tax exemption and reduction.

In July, to deal with fuel prices, the Civil Aviation Authority of Việt Nam (CAAV) also proposed raising air service prices on domestic routes to the Ministry of Transport (MoT).

In a recent proposal sent to MoT, CAAV asked for a reduction in environmental protection taxes and import taxes on jet fuels and an increase in service fees on domestic routes. — VNS