Domestic airfare ceiling increase from March 1, 2024

Accordingly, the Circular amends the price framework for basic economy class passenger transport services. Flights with a distance of less than 500 km have a ceiling price of VND 1,600,000/ticket/way for socio-economic development flights and VND 1,700,000/ticket/way for other flights.

The remaining flight groups will have their prices increased by 50,000 - 250,000 VND/ticket/way compared to the old regulations, depending on the length of each flight.

Specifically, for flights from 500 km to less than 850 km, the ceiling price is 2,250,000 VND/ticket/way (old price is 2,200,000 VND/ticket/way); flights with a distance from 850 km to less than 1,000 km have a maximum ticket price of 2,890,000 VND/ticket/way (old price is 2,790,000 VND/ticket/way); Flights from 1,000 km to less than 1,280 km have a ceiling price of 3,400,000 VND/ticket/way (old price was 3,200,000 VND/ticket/way) and flights with a distance of 1,280 km or more are 4,000,000 VND/ticket/way (old price was 3,750,000 VND/ticket/way).

The maximum price includes all costs that passengers must pay for an air ticket, excluding value added tax and fees collected on behalf of the airport (including passenger service fees and passenger and baggage security fees; service fees with additional items).

Previously, the Ministry of Transport said that the proposal to increase domestic airfares was due to changes in ticket price factors, especially rising fuel prices and high exchange rates. According to updated data from the International Air Transport Association (IATA), the price of Jet A1 fuel in Asia in June 2023 was 85.4 USD/barrel.

According to calculations by the Civil Aviation Authority of Vietnam, assuming that fuel costs account for 39.5% of total costs and other cost factors remain unchanged, with fluctuations in Jet A1 prices and USD/VND exchange rates, airlines' fuel costs in June 2023 increased by 23.1% compared to September 2015. The impact of fuel prices caused total costs to increase by 10.9% compared to August 2015.

The Civil Aviation Authority has received comments from Vietnam Airlines, Vietjet, Pacific Airlines, and Bamboo Airways about increasing domestic airfares.

According to Vietnam Airlines, aviation fuel costs account for about 36% of the airline’s transportation costs. The average fuel price in 2022 compared to 2015 (when the current price ceiling was applied) increased by about 85% from $67.3/barrel to $124.4/barrel, causing the airline’s costs to increase by about 30.5%.

In addition, air transport costs are more than 70% in foreign currency, while ticket sales in Vietnam are in VND. The exchange rate increased by 6.6% from 2015 to 2022 (an average increase from 21,900 VND/USD to 23,350 VND/USD), causing the airline's costs to increase by 4.3% accordingly.

Therefore, Vietnam Airlines' passenger transport cost in 2022 is VND 2,769/passenger/km, 43% higher than the cost in 2015 (VND 1,933/passenger/km).