Vietnamese airlines rowing over floor, ceiling rates for domestic services
TUOI TRE NEWS
UPDATED : 04/01/2017 12:39 GMT + 7
Arriving passengers leave Tan Son Nhat International Airport in Ho Chi Minh City.
Tuoi Tre
Vietnamese airlines did not see eye to eye with one another when responding to a Ministry of Transport's plan to cap airfares for domestic services.
The transport ministry, through the Civil Aviation Authority of Vietnam, is soliciting feedback on a plan to lift the ceiling prices for domestic routes by 7-16 percent to deal with the rising jet fuel costs.
According to the proposed pricing scheme, the maximum price for the Hanoi-Ho Chi Minh City route will be VND3.65 million (US$163) instead of the current VND3.2 million ($143).
Flag carrier Vietnam Airlines and two budget airlines, Vietjet and Jetstar Pacific Airlines, have all provided feedback to the plan, with one suggesting scrapping the ceiling price, whereas the other two said a floor rate for airfares should also be stipulated to ensure fair competition.
Ceiling vs. floor rates
Low-cost carrier Vietjet said the ceiling rate for airfare should be removed as it is no longer necessary and appropriate for the current rapid growing and highly competitive aviation market in Vietnam.
“The government should only manage and oversee the service quality of airlines, rather than capping their domestic airfares,” Vietjet said in a statement.
“The state should respect the healthy competition principles as per the market-based mechanism all airlines are following.”
According to Vietjet, once the ceiling airfare is scrapped, carriers will be able to upgrade and improve their service quality to better serve passengers.
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