Airfares may rise 22.7 percent: official

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Authorities are considering a 22.7 percent increase in domestic airfares as local carriers have been facing losses, a Finance Ministry official said Saturday.

Nguyen Tien Thoa, director of price control department at the Finance Ministry, told news website VnExpress in an intereview that the increase was calculated based on various cost factors, including the recent devaluation of the dong, rising fuel prices and higher salaries for foreign pilots.

Thoa said all airlines are seeking approval to increase their airfares by between 20 and 50 percent.

"We think it's reasonable that they want to raise the prices. What we are still considering is how much the hike should be and when it should take effect," he said in the interview.

The State Bank of Vietnam devalued the dong by 9.3 percent against the dollar on February 11.

A few weeks after the move, national carrier Vietnam Airlines requested the government to raise the price cap on domestic airfares. It also called for a complete removal of price caps in the next four years.

In Vietnam, flights shorter than 300 kilometers are capped at VND682,000 per ticket while the airfare cap on 300-500 kilometer flights is VND864,000. The caps are set at VND1.18 million on flights longer than 500 kilometers, and VND1.81 million on flights longer than 850 kilometers.

Thoa told VnExpress that the government also plans to remove the caps, except on routes serviced by just one carrier. However, he noted that such a plan needs to be accompanied by amendments to the Aviation Law and based on real competition between airline companies.

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