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Airlines' attempt to raise airfares frighten travel firms

posted Sep 28, 2011, 3:26 AM by Dong Travel   [ updated Sep 28, 2011, 3:29 AM by Mickey Dong Hoang Thinh ]
The information that the national flag air carrier Vietnam Airlines is seeking the permission to raise the ceiling on airfares has raised an objection from the public. People believe that the state owned airline is still making fat profits and there’s no need to increase the airfares.

If the ceiling on airfares suggested by Vietnam Airlines get approval, airlines will be able to raise the airfares by 1.5 times from the current levels. Prior to that, at the working session between the Civil Aviation Authority of Vietnam (CAAV) and aviation enterprises on September 14, Minister of Transport, Dinh La Thang, agreed in principle to the proposal and told airlines to draw up reasonable pricing plans to submit to the ministry before the ministry reports the issue to the Prime Minister.

If the airfare ceiling increases by 1.5 times, the one-way ticket for the Hanoi-HCM City flight would be priced at 4-5 million dong. It is unclear if the proposal relating to the airfare increase is accepted, but people have been rushing to book air tickets for the flights on Tet holiday, because they fear that the tickets may run out and the airfares would increase.

The Saigon Times has quoted its sources as saying that the Tet holiday will only come in four months, but the air tickets for the domestic flights from HCM city to the provinces in the central region and in the north have become rarer.

Booking agents said they have not received any notices from airlines about the additional flights for Tet holiday, though the number of passengers booking tickets for the flights from HCM City to Hanoi, Hai Phong, Da Nang and Nha Trang has been increasing dramatically.

The newspaper has also quoted its sources as saying that airlines deliberately slowed the sale of air tickets, because they hope the proposal on raising the ceiling airfares would be approved in some days.

One can see on Jetstar Pacific’s official website that all the seats on the flights from HCM City to Vinh and Hai Phong Cities in the week just before Tet have been booked. The running out of tickets is also can be seen with Vietnam Airlines’ flights on the HCM City-Quy Nhon air route, while only business class tickets priced at 4.4 million dong have been left for the HCM City-Hai Phong flights.

Explaining the proposal to raise the ceiling airfares, Vietnam Airlines said that this aims to stop the losses incurred when providing domestic air routes. However, Phap luat TP HCM newspaper has quoted its sources that Vietnam Airlines still can make fat profits with international air routes which can provide money to offset the unprofitable air routes.

Besides, Vietnam Airlines can also make profits from ground services, catering and other services.

Mai Trong Tuan, a former pilot, said on Phap luat TP HCM City that most of the subsidiaries of Vietnam Airlines are making profits, and that Vietnam Airlines should use the profits from the subsidiaries to offset the losses in providing domestic flights instead of attempting to raise the airfares.

Railway, coach tickets may raise accordingly

Experts have warned that the airfare increases, if approved, would kick off a new wave of railway and coach ticket increases.

Tuan went on to say that the overly high airfares and travel fees would not make good to the national economy. It is clear that high airfares will not help encourage tourism and attract investments. This explains why Vietnamese travelers now tend to choose outbound tours instead of domestic tours.

According to the HCM City Department for Culture, Sports and Tourism, the travelers, who book domestic tour packages, have to pay the tour fees higher by 15-25 percent since the beginning of the year.

T.T.Dung, Director of the THT Travel Firm, said that the number of travelers decreased by 35 percent from the same period of the last year, especially the number of travelers by air. In the past, the tour fees only increased on high season or holidays, while the tour fees increase at any times of the year due to the higher service fees and higher travel fees.

Source: VNN