Why do businesses lose more money as prices increase?

On March 18, Minister of Finance Ho Duc Phoc answered questions before the National Assembly Standing Committee. At the Long An bridge, questioning Minister Ho Duc Phoc, Deputy Phan Thi My Dung (Long An delegation) asked the Minister to explain why airfares have increased recently and what solutions are there to make it more convenient for people to travel and stimulate the strong development of Vietnam's tourism industry in the coming time?

Responding to the issue of airfares, Mr. Phoc said that the Ministry of Transport issued a service price framework. Airfares operating under that framework are implemented by airline companies. Airline companies base their prices on demand to set appropriate airfares. Recently, although airfares have increased, companies are still losing money. For example, Vietnam Airlines is currently losing 37 trillion VND, and its most profitable year is only 3 trillion VND. Therefore, it is still facing difficulties.

Speaking at the debate, Deputy Trinh Xuan An ( Dong Nai delegation) said that the recent increase in airfares is not necessarily due to supply and demand or fuel issues. There is a paradox with these products: the higher the price, the more loss businesses incur.

“The problem is to solve this problem. Currently, Vietnam Airlines' costs are too high. Electricity prices have only gone up and not down, but EVN is still losing money,” Mr. An stated, while also raising the question: Is it true that the price calculation based on the law in the past has not been stable? Has the calculation been accurate and complete?

Therefore, Mr. An suggested that there should be a review, inspection and examination of this content to ensure the interests of the people, the State and businesses in the coming time.

Source: https://daidoanket.vn/tai-sao-cang-tang-gia-thi-doanh-nghiep-lai-cang-lo-10275485.html