Why are domestic airfares getting more expensive?

The recent increase in domestic airfares has had a negative impact on the aviation, tourism, economic sectors and livelihoods of people in many localities. According to analysis by authorities, factors contributing to the increase in airfares include fuel costs, exchange rate fluctuations, aircraft shortages, etc.

Transactions at Vietnam Airlines service counter. (Photo: nhandan.vn)

In addition, according to domestic experts and international experience, some other reasons that have not been mentioned include the lack of competitiveness of the domestic aviation market, high maintenance costs abroad, and loose cooperation and connection between the aviation and tourism industries.

Negative impacts of rising ticket prices

A few months ago, a rather pressing paradox was raised at the National Assembly forum: People from Ho Chi Minh City to Hanoi, instead of flying directly with domestic airlines, bought tickets from foreign airlines to fly to Thailand and then from there fly back to Hanoi at a cheaper price.

High airfares first affect the aviation industry due to reduced travel demand and reduced airline revenue.

Domestic airfares are only slightly lower than airfares to other countries in the region, so many Vietnamese families have chosen to travel to Thailand because the cost in Bangkok is cheaper.

The General Statistics Office said that the air transport service price index in the first quarter increased by 85.44% over the same period.

High airfares first affect the aviation industry due to reduced travel demand and reduced airline revenue.

In addition, airfare also plays an important role in the total tour price, in fact, airfare can account for 40-60% of the total tour price. Airfare increases by about 20%, leading to a 10% increase in tour prices compared to the same period, forcing travel agencies to "avoid" flight routes to reduce tour prices.

The decline in air travel has had a ripple effect on jobs in the aviation and business sectors, as well as on the lives of people at destinations.

Leaders of aviation businesses said that the increase in ticket prices was due to high fuel costs, exchange rate differences, lack of aircraft (due to the manufacturer PW recalling engines, reducing the world's fleet), maintenance costs, market supply and demand; aircraft rental costs; VAT, fuel taxes, airport fees, etc.

Perhaps, the requirement for cooperation between aviation and tourism does not stop at the level of joint promotion and offering promotional packages, but needs to consider and develop a comprehensive and divergent plan to have long-term impact; at the same time, there needs to be a forum to discuss the strengths and weaknesses of each side, urgent support actions to ensure mutual benefits for many parties, including aviation-tourism businesses, destinations, authorities and local people.

Airfare also plays an important role in the total tour price, in fact, airfare can account for 40-60% of the total tour price. Airfare increases by about 20%, leading to a 10% increase in tour prices compared to the same period, forcing travel agencies to "avoid" flight routes to reduce tour prices.

An alarming “loop” problem is when high domestic airfares lead to tourist destinations having to lower their service prices, causing quality to decline, reducing tourist satisfaction. As a result, domestic travel demand decreases, the number of flights decreases, and finally domestic airfares continue to increase.

When airlines cut back on promotions and focus less on service quality, it can lead to continued increases in airfares and a decline in service quality, directly affecting domestic tourism demand.

Synchronized solutions to reduce ticket prices

Passengers check flight information at Noi Bai International Airport, Hanoi. (Photo: DANG ANH)

The issue of reducing domestic airfares can be completely resolved thanks to the comprehensive and full coordination of relevant entities. The Government and ministries and sectors can support the aviation industry by reducing 50% of take-off and landing service prices, flight operation service prices for domestic flights as in 2021; subsidizing to help aviation businesses offset costs and maintain operations, stimulating demand for both the tourism and aviation industries.

Currently, the capacity of aircraft maintenance, repair and overhaul (MRO) companies in Vietnam only meets 25% of the demand, and the allocation of airport land for MRO construction is extremely difficult and complicated, although there is no shortage of land. The need to simplify procedures and create favorable conditions for airlines to be allocated airport land for MRO investment is very urgent,...

In our opinion, the Government should encourage the establishment of new airlines, remove management procedures, and grant licenses for airline establishment according to the amended Investment Law (2016).

Establishment and licensing only need to follow a single procedure of the Aviation Law to allow investment, establishment of airlines more conveniently and competition in the market more equally, thereby increasing the competitiveness and flight capacity of airlines.

The Government is considering adjusting and reducing import taxes on fuel and petroleum to support airlines during difficult times; providing general support for the aviation and tourism industries with a stimulus package to reduce round-trip airfares, subsidize airfares and subsidize accommodation, according to the principle of not exceeding 40% of the value of tickets and rooms; at the same time, studying regulations on ceiling prices for domestic airfares currently applied in Vietnam in the direction of letting the market decide for itself, complying with the laws of supply and demand, with management and regulation according to the Competition Law.

The Government assigned the State Steering Committee on Tourism to establish a cooperation mechanism between the aviation and tourism sectors, possibly establishing a special aviation-tourism working group; periodically organizing conferences to learn about needs and barriers that need to be urgently removed, sharing information, planning strategies for product and service development, and jointly implementing promotional campaigns.

Local authorities with airports should study mechanisms and policies to compensate for losses in the aviation industry using central and local budgets to encourage the opening of air routes and increase the number of flights to localities developing tourism. In the immediate future, localities with a decline in the number of tourists traveling by air such as Phu Quoc, Da Nang, Quang Nam, etc. need timely solutions.

Currently, most hotel businesses apply the policy of check-in after 2 p.m. and check-out before 11 a.m. However, typical domestic and international examples show that flexible check-in and check-out is a new trend in the hotel industry, allowing guests to decide their own check-in and check-out times 24/7 without having to pay late check-out or early check-in fees,...

Airlines should remove ticket payment fees to demonstrate the industry's efforts and readiness to reduce airfares.

To develop sustainably, destinations and airlines need to commit to maintaining and improving service quality; airlines need to consider policies to keep ticket prices stable, avoiding major fluctuations.

We believe that with the joint efforts of the Government, localities and businesses, the goal of reducing domestic airfares will be achieved effectively, developing the aviation, tourism and other economic sectors and improving the livelihoods of local people.

According to nhandan.vn

Source: https://baohanam.com.vn/du-lich/vi-sao-gia-ve-bay-noi-dia-ngay-cang-dat-do-130076.html