High airfares are not due to service fees.

Speaking to the press this afternoon, a representative of the Vietnam Civil Aviation Authority stated that the high airfare is not due to high aviation service costs.

The Ministry of Finance claims that high ticket prices are not due to taxes, but the Civil Aviation Authority refutes this.

Accordingly, the cost structure of a flight consists of four factors. First, aviation fuel (37 - 42%). Of this, taxes as stipulated by the Ministry of Finance account for 7.7 - 8.7% of the total cost of a flight.

Secondly, aircraft leasing and maintenance costs account for 32-41%. Thirdly, flight service costs account for 6-7%, including both services priced by the Ministry of Transport and services determined by the enterprise. Fourthly, sales, management, and other costs (16-19%) are managed by the enterprise.

"Therefore, the government can regulate and reduce flight costs by reducing related expenses. Specifically, they can reduce fuel import tax, environmental protection tax, and VAT (currently accounting for 7.7 - 8.7% of the total cost of a flight). The service fee portion, which is priced by the Ministry of Transport, does not have a significant impact," a representative from the Civil Aviation Authority shared.

Why do passengers still feel that airline ticket prices are exorbitantly high?

Furthermore, since costs related to foreign currency account for approximately 80% of the cost of a flight, it is suggested that the competent authorities implement appropriate exchange rate management measures.

Specifically, these are the fees passengers have to pay for a basic economy class domestic flight ticket:

Taxes managed by the Ministry of Finance include: import tax on aviation fuel (accounting for 2.3 - 2.6% of the total cost of a flight) at a rate of 7%.

Environmental protection tax on aviation fuel (accounting for 2-2.3% of the total cost of a flight). The tax rate of VND 1,000/liter will be applied until the end of 2024 (benefiting from the tax reduction policy).

The VAT on aviation fuel (which accounts for 3.4 - 3.8% of the total cost of a flight) is refunded to the airline at a rate of 10%.

Services regulated by the Ministry of Transport include: flight operations (VATM fee collected); aircraft takeoff/landing services (collected by airport operators); aircraft parking space rental services (collected by airport operators); passenger check-in counter rental services; passenger boarding bridge rental services; comprehensive ground handling and technical services; automated baggage sorting services; aviation fuel refueling services; and services using underground refueling systems…

In addition, there are fees collected on behalf of businesses providing passenger terminal services and security services, including 60,000 - 100,000 VND (including VAT) for passenger service fees and 20,000 VND for passenger and baggage security fees…

Earlier, speaking to the press on the sidelines of the National Assembly on the morning of May 23, when asked about solutions to reduce taxes and fees to cool down airfare prices, Minister of Finance Ho Duc Phoc said: "How many cents are included in the taxes and fees in airfare? If you say taxes and fees are high, how much is that?"

He needs to understand that the fees people are talking about as accounting for a high proportion of the ticket price are service fees such as airport parking fees, aircraft fees, etc., collected by the Vietnam Airports Corporation (ACV), which is managed by the Ministry of Transport.

The Minister of Finance stated that Vietnam's policy of tax exemptions, reductions, and deferrals over the past four years, amounting to 200 trillion VND annually, has "eased the burden on the people." He added that if the mindset is to reduce taxes and fees for everything, it will be very difficult.

Source: https://thanhnien.vn/cuc-hang-khong-phan-phao-bo-tai-chinh-ve-may-bay-cao-khong-do-gia-dich-vu-185240523192323709.htm