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Aviation business association proposes raising the domestic airfare ceiling

The president of the Viet Nam Aviation Business Association (VABA) has proposed to adjust the ceiling fare for domestic airlines to promote the industry's recovery.


At a national conference between the Prime Minister and businesses last week, VABA's Chairperson Phạm Việt Dũng said: "Viet Nam's aviation market is growing rapidly on the recovery trend but not even in all segments."

The domestic market has fully recovered compared to before the pandemic. In contrast, the international market has recovered slowly, said Dũng, mentioning domestic passenger transport increased by 12 percent compared to 2019, global freight increased, but household goods decreased.

However, revenue was disproportionate due to increased fuel prices and some input prices, airlines still suffered losses, and liquidity improved little, the VABA chairman said. "The recovery is uneven among businesses in the aviation industry, in the aviation industry supply chains, while businesses in the transport infrastructure have a strong recovery, but airlines and the passenger transport companies are still facing difficulties, having to deal with the adverse problems left by the epidemic, especially the imbalance of cash flow in the past two years," he said.

To cope with these difficulties, Dũng said aviation businesses had made important changes, especially in restructuring to adapt to new trends. All airlines also prepare timely for the recovery period, preparing to open new routes.

The aviation segments with high flight frequency have recovered, such as at Phu Quoc Airport with 100 flights per day, surpassing Cam Ranh Airport.

Dũng said the biggest difficulties and obstacles of aviation enterprises were the international routes as they must adjust the roundabout because of the negatively affected disputes, putting more cost on the operation of aviation.

He also said gasoline prices were high, significantly affecting businesses. Although the pandemic situation has been reduced but not eliminated, there are still potential international and domestic risks.

Dũng said many countries were still cautious in opening the sky, especially those with many visitors to Viet Nam, causing the aviation market to lose many passengers and delaying the recovery of international routes.

Another factor related to the infrastructure of the aviation industry, although enhanced but not completely met, there are bottlenecks in infrastructure, especially for large airports such as Tan Son Nhat and Noi Bai airports.

Sharing specific difficulties in his business, Nguyễn Quốc Kỳ, Chairperson of Vietravel, said that air travel was exhausted in terms of labour and finance and had to be completely restored. Kỳ said: "Transportation, especially air transportation, is difficult. Fuel prices are high, sometimes accounting for over 60 percent of the cost. The price structure applied to petrol is usually delayed after one month. Therefore, for airlines, the adjustment of petrol and oil prices is also not immediate."

To deal with such problems to recover the aviation industry, VABA suggested the aviation industry and State agencies to coordinate with each other to improve the regulation, airport infrastructure, and thoroughly solving congestion at major airports.

Dũng from the VABA asked to speed up the development of aviation infrastructure and amend some documents and legal regulations related to policies of the aviation industry, including the source of socialisation of investment capital for the infrastructure of the sector. The association asked to soon restore and promote air traffic with other countries that have a large number of visitors to Viet Nam, expand international routes, actively implement promotional programmes to improve the country's image, and attract tourists to Viet Nam. And it would like relevant authorities to study and adjust the domestic ceiling price bracket for airlines and continue to maintain supporting policies related to land tax exemption and reduction.

In July, to deal with fuel prices, the Civil Aviation Authority of Viet Nam (CAAV) also proposed raising air service prices on domestic routes to the Ministry of Transport (MoT). In a recent proposal sent to MoT, CAAV asked for a reduction in environmental protection taxes and import taxes on jet fuels and an increase in service fees on domestic routes.



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