Floor price for air tickets

Imposing floor prices for domestic flight tickets will eliminate cheap airfares and can hinder plans to stimulate air travel and tourism, experts say.
Economist Ngo Tri Long said fixing floor prices was contrary to the law on price management in a market economy that could harm consumers.

The Civil Aviation Administration of Vietnam (CAAV) has proposed applying minimum prices of VND320,000-VND750,000 ($14.06 - $32.95) for domestic flight tickets from November 1, 2021 to October 31, 2022, to help airlines cope with difficulties caused by the Covid-19 pandemic.

Long said the proposal does not encourage businesses to lower their selling prices, causing disadvantages for consumers.

Bui Doan Ne, General Secretary of the Vietnam Aviation Business Association, said prices should be determined by the supply-demand relationship and by the market.

Another aviation expert who did not want to be named said the proposed pricing policy may affect competition in the market and preventing customers from flying.

"Over the years, the state has had good policies to support private airlines, contributing to a developed and competitive market and helping more people to fly. The state should continue to keep an objective view on this matter," he said.

Pushing up airfares can also restrict people's travel and tourism needs, especially at a time tourism demand has to be boosted after reopening the economy, said Ha Thu, owner of a ticket office in Hanoi.

"The proposal to impose a floor price to increase plane ticket prices is not appropriate when the State has urged many industries to reduce prices for consumers," Thu said.

In Europe, the aviation sector is slowly recovering thanks to the rapid pace of vaccination and airlines’ selling cheaper tickets.

A VnExpress survey of nearly 4,000 readers in April found that 93 percent did not support the floor price proposal.

Some responders also opined that the proposal was against market economy principles and would pose more problems for consumers at a time their incomes have fallen because of the pandemic.

In the first seven months of 2021, Vietnamese carriers served 13.7 million passengers, a decline of 32.3 percent over the same period in 2020 and down 57.7 percent compared to the same period in 2019.

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