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Cần Thơ provides subsidy to airlines flying to city

Update: May, 17/2017 - 11:00
Cần Thơ International Airport in the Cửu Long (Mekong) Delta city of Cần Thơ. The city authorities plan to open more new local and international flights to the city by giving a subsidy to airlines. — Photo
Viet Nam News

HCM CITY — Cần Thơ plans to open more domestic and international flights to the city by giving subsidies to airlines, with a maximum subsidy of VNĐ8.5 billion (US$375,000) a year, said a city official.

Võ Thành Thống, chairman of Cần Thơ People’s Committee, said the city had worked with the Civil Aviation Administration of Việt Nam (CAAV) to open new routes to Hải Phòng, Cam Ranh and Bangkok by the end of this year.

Cần Thơ is drafting policies to provide support to airlines that open flights to the delta city, including initial support for office rentals, promotions, ground service fees and financial aid for vacant seats.

Airlines opening new routes to and from Cần Thơ will enjoy incentives such as 12 months of office rental at a maximum subsidy of VNĐ15 million ($660) per month per company.

Ground service fees will be halved in the first year for domestic flights, while international flights will receive an additional 30 per cent discount in the following year.

The city will also subsidise the first year’s losses for the airlines, at a maximum of VNĐ5 billion for domestic flights per year, and a maximum of VNĐ8.5 billion for international flights per year.

To promote tourism development, the city has asked competent agencies to encourage travel firms to offer preferential prices for tourists traveling by air to the city.

Cần Thơ International Airport has domestic flights to Hà Nội, Phú Quốc, Côn Đảo and Đà Nẵng.

Meanwhile, routes connecting the city with Đà Lạt and Cam Ranh (Nha Trang) have been suspended due to losses.

For international routes, flights from the city to Taipei are only operated during Lunar New Year holiday, while chartered flights to Bangkok have been suspended.

The city plans to open three new domestic flights to Vinh, Đà Lạt and Cam Ranh and five new international flights to Bangkok, Singapore, Seoul, Taipei and Tokyo by 2020, according to Thống.

Airlines’ reaction

In response, airlines do not appear to be interested in the move, saying flights to Cần Thơ are not attractive due to low demand. Opening new flights, they said, would not recover capital unless the rate of occupancy of seats reached 70 per cent.  

A representative of the budget airline Vietjet said flights to Cần Thơ were not an attractive route compared to other domestic routes.

Meanwhile, a representative of Jetstar Pacific, said that if there was demand, it would run a new flight without needing a subsidy.

The airline opened a flight from Hà Nội to Cần Thơ in 2009, but it was suspended due to low demand.

Economist Bùi Quang Tín said it was not rational to use the State budget to subsidise new flights to Cần Thơ.  

“Many airlines want to open flights in Việt Nam. Why do we have to use the State budget to subsidise flights while the budget is now limited,” Tín said.

Võ Huy Cường, deputy head of the CAAV, said the city must study the demand and potential of the new flights to Cần Thơ before making a decision.

If there is a potential, the new flights to Cần Thơ would help ease the burden for Tân Sơn Nhất international airport, which is now seriously overloaded, he said.

Last year, the number of visitors to Cần Thơ grew 14 per cent year-on-year to reach 5.3 million, including more than 590,000 foreign visitors.

Total tourism revenue reached VNĐ1,826 billion ($80 million), a rise of 5 per cent over the previous year. — VNS



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