Air fares set to soar with proposed hike to Vietnam's aviation fees

The national aviation administration wants to lift landing and takeoff fees by 15 percent. Fares for domestic flights in Vietnam are likely to increase next year following a proposal by the civil aviation agency to raise costs for various airport services by up to 42 percent. The Civil Aviation Administration of Vietnam (CAAV) has asked the Ministry of Transport to hike landing and takeoff fees for domestic flights at all airports by 15 percent from next year. Aviation security and service fees for domestic passengers, which are included in ticket fares, would also go up 42 percent to VND100,000 ($4.50) per passenger at large international airports, such as Cam Ranh, Can Tho, Cat Bi, Da Nang, Noi Bai, Tan Son Nhat and Vinh.Fees at smaller airports in central Vietnam, including Buon Ma Thuot, Chu Lai, Dong Hoi, Lien Khuong, Phu Bai, Phu Cat, Pleiku and Tho Xuan, as well as Phu Quoc International Airport on the southern resort island, would rise by 33 percent to VND80,000 ($3.60) per person, the CAAV said.

Lai Xuan Thanh, director of the unit, said it made the proposal based on the recommendation of the state-owned Airports Corporation of Vietnam, which said that the landing and takeoff fees for domestic flights at 22 airports nationwide have remained unchanged for the past five years and are just 32-72 percent of the average rate in Southeast Asia.

“We think the recommendation is suitable because heated aviation growth has put a lot of pressure on infrastructure,” Thanh said, as cited by the Vietnam News Agency.Landing and takeoff fees for domestic flights in Vietnam currently range between VND1.35 and 3 million ($60-135). “The fees are too low. They fail to account for how much the government has to subsidize the airports,” Thanh said.

Carriers said the fee hikes are bound to push ticket prices up, but that may not happen immediately as they do not want to lose customers. Carriers said they will ask the CAAV to recalculate the hikes to reduce their impact on ticket prices.

Thanh said Vietnamese carriers offer tickets that cost less than the caps set by the government, so there is still room for them to increase. Vietnam’s aviation market has been booming in recent years. The number of Vietnamese air passengers jumped by 29 percent on-year to nearly 19 million in the first six months, according to the CAAV. However, more than 20,000 flights, or 15.8 percent of the total, were delayed, often due to overloaded facilities.