The Ministry of Transport will increase the domestic air ticket price ceiling in Vietnam by an average of 3.75% later this year, a decision to delight local carriers.
The maximum airfare on four out of five flight distances will rise in the second or third quarter, according to a recent Ministry of Finance price report.
The biggest increase will be 6.67% (to VND4 million or $170) for one-way tickets on flights of 1,280 kilometers (Hanoi to Phu Quoc Island) and longer.
Flights between 1,000 and 1,280 kilometers will see their ticket cap price rise 6.25% to VND3.4 million.
Flights of smaller distances will see their maximum price rise by between 2.27% and 3.58%.
Flights under 500 kilometers will see no ceiling change. Their prices will remain at a maximum of VND1.7 million per one-way ticket.
The cap price increase will likely increase Vietnam’s 2023 Consumer Price Index by 0.07% points.
Earlier this year, Vietnam Airlines and Bamboo Airways proposed increasing the cap ticket price to take into account rising in costs.
The airfare price cap was last increased in 2015.
By November last year, fuel costs had surged more than 80% from September 2015, which raised airlines’ total expenses by 33.5%, according to the Civil Aviation Authority of Vietnam (CAAV).
Bamboo Airways CEO Nguyen Manh Quan has argued that the price cap be applied only to air routes operated by a single carrier.
For routes with two carriers or more, the cap should be removed so the “market can adjust by itself,” he said.
Some analysts have said that the price cap is unreasonable and could slow the growth of domestic aviation.
In 2021, the CAAV proposed that air routes with three carriers or more have no price cap to allow for more healthy competition in services.