Vietnam Aviation under pressure
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The Civil Aviation Authority of Vietnam has recommended a 3.7-percent increase in domestic fare caps to enable airlines to cope with surging fuel prices.
In a proposal it submitted to the Ministry of Transportation, it said fuel costs have risen by 84 percent since September 2015, when the current caps were introduceThe price of aviation fuel Jet A1 has doubled in the period from US$61.6 per barrel to $132.6, according to data from the International Air Transport Association.
CAAV has proposed hikes ranging between 2.2 percent for routes of up to 850 kilometers and 6.6 percent for those above 1,280 km. Currently, these fares are capped at VND2.2 million ($96.1) and VND3.75 million ($163.8).
In 2019, Vietnam Airlines had called for abolishing the domestic price caps altogether.
Last month it called for raising the caps and fuel surcharges. Vietnam is one of the few countries in the world to still cap airfares.
Questions & Answers
Q.What specific fuel price increase has affected airlines operating in Vietnam?
What specific fuel price increase has affected airlines operating in Vietnam?
Fuel costs for Vietnamese airlines have increased by 84 percent since September 2015. The price of Jet A1 aviation fuel has doubled, rising from US$61.6 per barrel to $132.6 during that period.
Q.What is the range of proposed fare cap increases?
What is the range of proposed fare cap increases?
The proposed increases range from 2.2 percent for shorter routes up to 850 kilometers, to 6.6 percent for longer routes exceeding 1,280 kilometers. These new caps would apply to domestic airfares.
Q.When were the current domestic fare caps established in Vietnam?
When were the current domestic fare caps established in Vietnam?
The current domestic fare caps were introduced in September 2015. Since then, the Civil Aviation Authority of Vietnam has noted a significant rise in fuel prices, prompting the recommendation for an increase.
Q.What has Vietnam Airlines previously requested regarding fare caps?
What has Vietnam Airlines previously requested regarding fare caps?
In 2019, Vietnam Airlines called for the complete abolition of domestic price caps. Last month, it revised its stance, asking for an increase in the existing caps and the introduction of fuel surcharges.
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