Hanoi (VNS/VNA) - The ceiling price of tickets ondomestic flights will be increased from the beginning of March, according toCircular 34 issued recently by the Ministry of Transport (MoT).

The price framework for basic economy class passengertransportation services will be amended. The ceiling airfares will remainunchanged at 1.6 million VND (65.23 USD) per one-way ticket for routes whichserve the socio-economic development in remote areas or islands where there isonly one carrier operating, and 1.7 million VND for other domestic routesbelow 500km.

The remaining flight routes are subject to a price increase of 50,000-250,000VND per one-way ticket, depending on the length of each route.
The maximum price includes all costs a passenger must pay for anairline's service, excluding value added tax and fees collected on behalf ofthe airport (including passenger service fees and security assurance fees,luggage; service charges with additional items).

According to a review by the Civil Aviation Authority of Vietnam(CAAV) under the Ministry of Transport, the proposed increase in domestic airticket prices is due to changes in the factors that form ticket prices,especially hikes of fuel prices and exchange rates.

Data from the International Air Transport Association (IATA), Jet A1 fuel pricein Asia in June 2023 was 85.4 USD a barrel.

CAAV’s calculations showed that with the assumption that fuel costaccounts for 39.5% of total costs and having no fluctuation for other costfactors, the airlines' fuel cost in June was increased by 23.1% compared toSeptember 2015. The fuel prices increased total costs by 10.9%.

The CAAV has received comments from Vietnam Airlines, Vietjet,Pacific Airlines, and Bamboo Airways on increasing domestic air ticket prices.
According to Vietnam Airlines, aviation fuel costs account forabout 36% of the airline's transportation costs. The average fuel price in 2022compared to 2015 (when the current price ceiling was applied) increased byabout 85% from 67.3 USD to 124.4 USD a barrel, causing the company's costs toincrease by about 30.5%.

Along with that, more than 70% of air transportation costs arepaid by foreign currency, while ticket sales revenue in Vietnam is inVietnamese dong. The exchange rate was increased by 6.6% from 2015 to2022, causing the company's costs to increase by 4.3% respectively.

Therefore, Vietnam Airlines' passenger transportation cost in 2022was 2,769 VND a passenger per kilometre, increasing by 43% compared to the costin 2015 (1,933 USD)./.