15:24 01/11/2016

The Vietnamese aviation watchdog has asked three domestic airlines to look at the possibility of cutting airfares further to benefit passengers, at a time when jet fuel prices keep falling.

National carrier Vietnam Airlines and low-cost airlines Jetstar Pacific and Vietjet Air were informed of the directive via a document signed by Lai Xuan Thanh, head of the Civil Aviation Authority of Vietnam (CAAV) on Wednesday.

The three carriers are also required to report their price-cutting plans to the CAAV by January 10, according to the document.

The CAAV request came hot on the heels of a statement by Minister of Transport Dinh La Thang on Monday that Vietnam Airlines should consider slashing ticket prices given its whopping profits.

The minister suggested that the flag carrier consider lowering airfares “for people’s sake,” after the airline’s boss reported that it had exceeded both revenue and profit targets in 2015.

Last year, the national carrier’s consolidated revenue topped VND70 trillion (US$3.13 billion), 129 percent over its target, whereas pre-tax profit reached more than VND1.4 trillion ($62.5 million), 44 percent higher than estimated, according to a company report.

In the Wednesday document, the CAAV said domestic airlines are capable of cutting ticket prices further, as they did in September last year, thanks to jet fuel prices continually slumping.

The aviation watchdog acknowledged that the three carriers have sold cheap tickets for many domestic routes and launched a lot of promotional campaigns in 2015, helping many people travel by air.

“As of December 31, 2015, jet fuel prices had continued falling, which left a positive impact on the air transportation market,” the CAAV said.

Last month Jet A1, the most common jet fuel, averaged only $47.66 a barrel, down 39 percent from a year earlier.

With fuel accounting for 39.5 percent of the operating expense of an airline, it is certain that carriers pay for lower input cost when jet fuel prices go down, according to the CAAV.

“As ordered by the Minister of Transport, the CAAV requests that airlines come up with more solutions for slashing airfares to create more conditions for people to be able to travel by air,” it said.

The carriers were also asked to run more promotional programs to attract flyers.

In Vietnam, airfares are currently capped at VND1.6 million ($70) to VND3.75 million ($167), for distances ranging from below 500km to more than 1,280km, after the CAAV lowered the ceiling in October last year.

In 2015, 40.1 million people traveled domestically by air, up 21.2 percent from a year earlier, as airfares became more affordable, according to the CAAV.

Source: Tuoitrenews


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