Vietnam Airlines seeks relief from price caps 

February 26, 2011
National carrier Vietnam Airlines has asked the government to raise the price cap on domestic airfares

National carrier Vietnam Airlines has asked the government to raise the price cap on domestic airfares following a devaluation of the dong against the dollar.

The airline’s long term proposal further requested a complete removal of price caps in the next four years.

It also sought permission to start collecting a surcharge when jet fuel prices increase.

On Thursday, Lai Xuan Thanh, deputy head of the Civil Aviation Administration of Vietnam, said that the carrier’s proposal will be considered by the Finance and Transport Ministries. 

Flights shorter than 300 kilometers are now capped at VND682,000 while the airfare cap on 300-500 kilometer flights is VND864,000.

The caps are set at VND1.18 million on flights longer than 500 kilometers, and VND1.81 million on flights longer than 850 kilometers.

The caps do not include value-added taxes.

The State Bank of Vietnam devalued the dong by 9.3 percent against the dollar on February 11.

Local carriers have complained that it’s impossible to make money at the current prices due to a stronger dollar and rising fuel costs.

Vietnam Airlines was reported as having lost US$30 million on domestic flights last year.

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