Domestic airfares are too high, why?

Hành khách đi lại máy bay dịp lễ tăng cao, hàng không vẫn khó giảm giá vé - Ảnh: CÔNG TRUNG — Air passengers increase during the holidays, but airlines still find it difficult to reduce ticket prices - Photo: CONG TRUNG

According to airlines, the reason is that input costs calculated in USD such as fuel, aircraft rental, pilot rental... increase with the USD price, not to mention the sharp decrease in the number of aircraft. Meanwhile, experts say that the reason domestic airfares are too high is due to the lack of connection between aviation and tourism , and the lack of support in tax and fee policies...

Traveling is difficult with airfare prices

According to a survey of ticket prices on April 23 on airlines' websites, many domestic flights to tourist destinations Da Nang , Phu Quoc, Nha Trang on the occasion of April 30 and May 1 are almost fully booked. For flights with remaining tickets, ticket prices show no signs of decreasing near the date like previous years.

For example, the route from Ho Chi Minh City to Nha Trang, Da Nang costs 4.5 - 6 million VND/round trip. While on normal days, this route only costs about 2.3 million VND. Passengers flying from Hanoi to Phu Quoc during the holidays are being offered a round-trip ticket price of 7 - 12 million VND by the airline, while on normal days it ranges from 2.9 - 4 million VND.

This has caused the number of tourists traveling by air to some destinations to be forecast to decrease sharply compared to previous years. Meanwhile, surveys on the websites of many travel agencies show that tour prices are being sold cheaper than round-trip airfares.

For example, Vietravel Company is still accepting bookings for package tours (including airfare, meals, hotels...) from Ho Chi Minh City to Thailand for 5 days and 4 nights at 8.9 million VND/person.

Mr. Nguyen Bao Chau (Binh Thanh District, Ho Chi Minh City) said that the airfare for the April 30 holiday this year is not only high but also scarce. For a trip, the airfare of 5-6 million VND is too high, while many package tours, especially to Thailand for 4-5 days, have prices comparable to the airfare.

Mr. Minh Tuan (Phu Nhuan), in charge of industrial equipment sales in Ho Chi Minh City for a foreign company, said that airfares during peak season should be cheaper because the high occupancy rate for both outbound and return flights is very good. "A full flight will cost less than a flight with few passengers, so the ticket price should be reduced," said Mr. Tuan.

Airlines say it is difficult to reduce ticket prices

Speaking with Tuoi Tre, the general director of an airline said that the high airfares are due to the nature of aviation, where many transactions with foreign airlines, from service maintenance, aircraft purchases, asset leasing, pilot hiring... are all paid in USD.

"Even a broken screw on an airplane can cost hundreds to thousands of dollars. When the USD exchange rate increases, input costs also increase, and airfares are also pushed up," he said.

According to Mr. Dang Ngoc Hoa - Chairman of the Board of Directors of Vietnam Airlines, for every 1% fluctuation in exchange rates, the airline loses 300 billion VND. In 2023, due to exchange rate fluctuations alone, the airline lost up to 903 billion VND. In addition, rising fuel prices also affect the input costs of airlines.

For example, before the pandemic, oil prices were 98-115 USD/barrel but now fluctuate between 120-130 USD/barrel. The sharp increase in input costs forced airlines to adjust ticket prices but they are still within the ceiling price range set by the State. "However, ticket prices for the April 30 holiday and the summer peak will be different from those for the low season," he said.

The reduction in the number of aircraft also affects people's travel. To date, 22 aircraft have had their engines removed due to manufacturer recalls for repair. Except for Vietnam Airlines and Vietjet, the number of aircraft of three airlines, Bamboo Airways, Vietravel Airlines and Pacific Airlines, has decreased from 30 to six, of which Pacific Airlines has no aircraft left.

Mr. Dinh Viet Thang, Director of the Civil Aviation Authority of Vietnam, said that the global shortage of aircraft has made renting aircraft both difficult and expensive. Specifically, before Tet 2024, the price to rent an Airbus A321 was 2,300 USD/hour, now the price has reached 4,000 USD/hour. However, airlines said it is very difficult to rent aircraft.

Lack of connection, difficult to reduce airfare

Explaining the reason why domestic airfares are even higher than package tours to some countries, the director of a tourism business said that these destinations have close links between aviation and tourism, not to mention that some countries also have policies to subsidize airfares to attract tourists.

For example, in early April, Thailand decided to support airlines by reducing ticket prices by 3.8 - 14% on some domestic routes during the Songkran water festival. Flights between Bangkok and Chiang Mai, Krabi and Phuket are capped at 3,000 baht (over 2 million VND) per flight.

These airlines offer many promotions, even 15-20% discount on ticket prices to attract many tourists from China, Malaysia, Indonesia, Vietnam... to travel to Thailand during this holiday season.

"Thailand identifies revenue not only from airfares, but also from all tourist spending. Cheap airfares and a 3-4 times increase in the number of tourists traveling to Thailand are what the country's tourism industry is aiming for," a tourism expert affirmed.

Mr. Jonathan Hanh Nguyen, Chairman of the Board of Directors of the Imex Pan Pacific Group, also said that when linking aviation and tourism, airfares can be cheap without airlines losing money, because costs are offset by linked services such as booking tours, resorts, shopping, dining, etc.

According to Mr. Hanh Nguyen, with downtown duty-free shops or premium outlets about to open in some cities, Vietnam will attract more tourists to shop and spend if airfares are reasonable.

"For example, with 20 million passengers traveling to/from Vietnam, not only does aviation attract passengers, but the airport has already collected 400 million USD from the terminal service fee and security screening fee of 20 USD/passenger," said Mr. Jonathan Hanh Nguyen.

Airfare prices continue to rise

This is the opinion of Mr. Subhas Menon, Association of Asia Pacific Airlines (AAPA), given at a recent working session with the Civil Aviation Authority of Vietnam. According to Mr. Subhas Menon, airfares in the world will tend to increase higher than before, mainly due to shortage of aircraft, fuel, high exchange rates, shortage of personnel...

According to statistics from FCM Consulting - a multinational travel service provider, by the end of 2023, international economy class airfares had increased by 17 - 25% compared to 2019. In 2024, FCM Consulting forecasts that global airfares will increase by 3 - 7% and will continue to increase in the following years.

TN (according to Tuoi Tre)

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