|Passengers disembark a Vietnam Airlines aircraft in Hanoi.|
A recent decision by the government to lift caps on air fares [on certain routes] provides more price choices and can change the habits of Vietnamese passengers during the Tet holidays, local airlines said.
The Ministry of Finance and the Ministry of Transport last week decided to lift the price ceiling on fares on domestic routes on which two or more airlines fly, allowing carriers to fix their own prices based on demand.
According to the Civil Aviation Administration of Vietnam, the decision means the ministries will no longer use price limits to monitor these routes.
But on routes served by only one airline, fares will still be subject to price limits.
Trinh Hong Quang, deputy general director of Vietnam Airlines, said the ministries’ move has “unshackled” carriers, giving them a chance to pursue “more flexible” pricing policies.
The price of a one-way economy class ticket between Hanoi and Ho Chi Minh City, for instance, used to be capped at VND1.7 million (US$100) but now it can exceed that limit or even go down to a few hundreds of thousands of dong.
Both Vietnam Airlines and budget airline Jetstar Pacific said passengers need to get accustomed to a large gap between air ticket prices, depending on the date and time of flights.
With the price ceiling scrapped, an airline has to change its business strategy to survive, Luong Hoai Nam, general director of Jetstar Pacific said.
An airline can increase fares on high-demand routes and lower fares on others to help balance supply and demand, especially during the Lunar New Year (Tet) season next January, he said.
Vietnam Airlines has said in the past that the demand for flights from HCMC to Hanoi before Tet and in the reverse direction after Tet always surged since many people in the south visit their families in the north during the holidays.
Although it wants to meet the demand of all passengers, the carrier said it cannot increase flights by more than 30 percent without affecting its profits. But adjustments in fares would allow it to do so, it added.
Nam said he expects the move to abolish the price ceiling will help change the flying habits of passengers. For instance, some people living or working in the south may consider inviting their relatives from the north to visit them during Tet, he said.
Although airlines have not announced new fares yet, they said a ticket on a high-demand route could go up to VND2 million ($118).
Vietnam Airlines said it would add 800 more flights during January-February.
Jetstar Pacific said it plans to operate two additional flights daily on the Hanoi-HCMC sector and re-launch the Hue-HCMC route.
Meanwhile, Indochina Airlines said in October it would start flying on domestic routes from later this month, operating four flights daily between HCMC and Hanoi.
The only concern now is if passengers’ interest will be hurt by airlines’ raising their fares too high or colluding to fix fares.
But an official from the Ministry of Finance’s Price Management Unit assured that though the price ceiling has been lifted, it does not mean the government would stop monitoring air fares completely.
“The airlines will not be allowed to set whatever fares they want. They have to inform the Ministry of Finance and the Ministry of Transport of their new prices.
“The authorities will step in if they see fares are too high.”
State-owned Vietnam Airlines, its subsidiary Vasco and Jetstar Pacific are the three airlines currently serving domestic routes.
Source: TN, LD
Update from: http://www.thanhniennews.com/business/?catid=2&newsid=43825