Record high airfares continue, concerns spread to 2025

Sky-high prices all year round

The CEO of a travel company in Hanoi specializing in welcoming European and American guests once complained to VietNamNet reporters that from the New Year holiday to April 2025, domestic ticket prices on domestic routes increased sharply, and units specializing in selling tours to international guests like his company could not book tickets.

He cited that at that time, the airfare for the Hanoi - Da Nang / Hue route in late December and early January 2025 ranged from 4.5 million VND, while normally the highest was around 2.5 million VND. Of course, because this was the peak travel season (New Year's Day), this price was still sky-high.

“Domestic airfares are too high, making tour prices expensive. Many international tourists switch to traveling to Thailand, Cambodia, Indonesia, etc. instead of Vietnam, causing great damage to the tourism industry,” the director worried.

In fact, domestic airfares have started to increase since the end of last year. According to a survey conducted by PV in December 2023, on the occasion of the Lunar New Year 2024, airfares for 'hot' routes, such as from Ho Chi Minh City to Hanoi and central provinces such as Vinh (Nghe An), Thanh Hoa, Quang Binh, Quy Nhon, etc., are always at a high level of 7-7.2 million VND/round-trip ticket, even at "midnight" flight times.

Although domestic airlines rushed to charter more planes afterwards, ticket prices were still "hot" and quickly sold out.

In 2024, the expected volume of air passenger transport is estimated at 80.3 million passengers. Of which, the number of domestic passengers is about 38.5 million, down 10.5% compared to 2023. Photo: Nam Khanh

The sky-high airfares are somewhat understandable as it is the peak of Tet holiday and travel demand increases sharply. However, even in the low season, which is March and April this year, airfares are still expensive.

During long holidays such as April 30 - May 1 or September 2, many tourists do not dare to spend money on plane tickets because the price of the Hanoi - Phu Quoc route is pushed up to 7-8 million VND; the prices of routes to Nha Trang, Con Dao, Da Nang, Da Lat,... are also shockingly high, from 5-6 million VND/ticket, so flying to these destinations becomes a luxury for many tourists.

Airfares have increased by 15-20%, as admitted by the leaders of the Civil Aviation Authority of Vietnam (Ministry of Transport), and will continue throughout 2024. Up to this point, ticket prices for the Lunar New Year are also at a high level, more than 7 million VND/round-trip ticket, for crowded flights.

For tourism businesses, the increase in airfares means pushing transportation costs up to 50%, even 70% of the total tour price. Domestic tours are heavily affected, especially from Ho Chi Minh City and Hanoi to Da Nang/Hanoi/Quy Nhon/Tuy Hoa/Phu Quoc,... causing domestic tourists to "run away", flocking to Thailand, Malaysia, China, Korea,... because of the attractive tour prices.

During many holidays, statistics from travel agencies show that the percentage of Vietnamese people choosing to travel abroad is up to 60-70%, while domestic destinations are starved of tourists and travel companies complain.

The reason, according to the Civil Aviation Authority of Vietnam (Ministry of Transport), is due to the direct impact of the shrinking fleet and capacity on domestic and international routes in 2024 and 2025. Over 40 aircraft of airlines have had to stop flying since January to check their engines, causing a serious shortage of aircraft. It will take until the end of 2026, or even early 2027, to complete the repair of faulty engines and for those aircraft to return to normal operations.

Not to mention, Bamboo Airways stopped operating its Embraer E190 fleet (3 aircraft) to restructure and cut costs; Pacific Airlines paid off all its aircraft to clear debt and no longer had aircraft to operate... so the supply and ticket price situation became more tense.

In addition, partly due to the ceiling price of domestic airfares on most routes increasing by 3.7-6.7% from March 1, according to new regulations of the Ministry of Transport.

When will ticket prices stop increasing?

Early last year, when the media reported on the increase in domestic airfares, the Civil Aviation Authority of Vietnam explained that this was part of a general upward trend in the world, due to the impact of five main factors: high fuel prices; foreign exchange rate differences; engine recalls by manufacturers causing a shortage of aircraft; and the supply and demand situation of air transport.

At the conference "Can we cool down airfares?" held in May, Mr. Dang Anh Tuan, Deputy General Director of Vietnam Airlines, informed that fuel and aircraft costs increased by 76-77%, pushing up ticket prices. These costs are beyond the control of all airlines.

According to the leader of Bamboo Airways, the biggest costs include flight costs, flight fuel, and engine rental, accounting for 55-60% of the total cost of making up ticket prices depending on the period and airline, airlines are forced to accept the world price level.

However, many people believe that the reason for the high airfares is because airlines are burdened with over 20 types of direct and indirect fees. However, the Ministry of Finance leader said that the tax and fee rates in airfares are collected by airlines according to regulations and account for very little, from 10-30% of the total ticket cost.

Of which, the airlines collect 8-10% VAT and pay corporate income tax. As for other fees, such as airport fees, security screening, etc., the airlines collect on behalf of the Vietnam Airports Corporation (ACV) - the unit that manages and operates more than 20 airports nationwide.

However, information about costs in the airfare structure is not clear and transparent, so the record high airfare makes passengers feel sad. Not to mention, in that context, domestic airlines have continuously reported profits this year.

For example, according to the third quarter financial report, Vietnam Airlines (code HVN) announced pre-tax profit of VND975 billion in the quarter, and after-tax profit of the parent company of VND768 billion. This is the third consecutive quarter that the airline has made a profit. In the first 9 months of 2024, VNA achieved revenue of VND79,161 billion, up 17% over the same period last year. Net profit in the past 9 months was nearly VND6,000 billion.

Vietjet Air (code VJC) also made its mark with outstanding business results. In the third quarter, the airline's revenue reached VND18,164 billion, and its after-tax profit jumped to VND570 billion, up 28% and 660% respectively compared to the same period last year. In the first 9 months, the airline recorded VND52,194 billion in revenue and VND1,405 billion in after-tax profit.

In 2025, in the context of a fleet shortage, airlines are still trying to rent more planes in the immediate future to serve the Tet peak. Of which, Vietjet Air plans to add 6 more planes, Vietnam Airlines 5 planes.

State management agencies also continue to support aviation businesses, such as in Circular 44 of the Ministry of Transport recently, domestic airlines will enjoy many incentives on service prices from 2025, such as take-off and landing services; flight operations services..., so it is expected that airfares next year will be adjusted to a reasonable level, meeting people's travel needs.