Life in the sluggish lane

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A VietJetAir passenger checks in at a counter at Noi Bai Airport in Hanoi

Every year for the last five years, just before Tet, the Lunar New Year festival, Kim Tien and her family have taken a bus from Ho Chi Minh City to their hometown in the central province of Quang Nam.

This year, there has been a change in plans. Instead of arriving in Quang Nam ahead of the festival, they will not leave Ho Chi Minh City until the second day of the New Year. That means the family will have to skip the most important part the traditional family gathering on Lunar New Year's Eve as well as the festivities on the first day of Tet, which falls on February 10.

Tien says the switch can't be helped because the cost of a bus ticket from HCMC to her hometown doubles during the days right before Tet, and then returns to normal around US$12 the day after.

She cannot afford the premium prices, she says.

Like Tien, thousands facing the steep hike in bus fares during the festival season are having to make difficult choices.

Bus fares in Vietnam often go up by 20-60 percent during several holidays including the Independence Day (September 2), the Reunification Day (April 30) and Labor Day (May 1). On trains, the increase in fares is 10-39 percent.

However, even without the festive season rush, transportation fares have been increasing continuously in the country, and Vietnam now tops Southeast Asia in this regard, frequent commuters and industry insiders say.

Frequent flyer Tran Duy Khiem, director of the HCMC-based Khang Minh Export and Import Joint Stock Company, says compared to carriers from other countries like Singapore and Thailand, Vietnamese airlines charge very high prices.

For example, the En Viet Group, an air ticket agent in HCMC gave Vietweek reporters a price of $160 for a Singapore Airlines economy ticket from HCMC to Singapore, leaving at 12.15 p.m. on November 16. A Vietnam Airlines flight leaving at 9.15 a.m. that same day cost $240.

A sales woman with the agent said that both the fares had already included tax and fees.

Pham Kim Nhung, director of the One Travel International Company in HCMC, also said there is a big difference between airfares for flights from HCMC to the central city of Da Nang and to Hanoi, and those from the city to Bangkok.

Vietnam Airlines offers a round-trip HCMC-Hanoi ticket for VND6 million ($285), which is equal to a five-day tour to Thailand, she said.

Travel companies say local tourism is also affected by expensive and volatile transportation prices. They say transportation costs actually account for a major part of the price of a tour in Vietnam, much more than that of other countries. 

Forty to 50 percent of the tours' prices are transportation fares, if they use both air and road transportation. Meanwhile, it is 20-25 percent if the tours use only road, they say.  

Ung Phuong Dung, director of Indochina Tourist and Trade Company, said the high bus and airfares are making the country's tourism sector "less attractive."

Since travel firms are unprepared for sudden increases in airfares, her company usually does not include air tickets when quoting prices for foreign partners, Dung said.

"If we include airfares in quoted prices, we will certainly end up making losses, because we often sell tours to foreign customers a year in advance," Dung said.

Moreover, it takes much time to handle related work whenever airfares go up, like revising contracts and re-negotiating with partners who, in turn, have to charge tourists more, she said. Sometimes revised tour prices increase a lot following airfare adjustments, she added.

Even so, what foreign tourists complain about the most is transport, Dung said.

Earlier, on October 15, together with private carriers Air Mekong and VietJetAir, Vietnam Airlines increased its ticket prices by between 1 and 4 percent.

Last year, local airfares were raised once just before Tet and then in April, by 10 percent each time.

Input costs

Nguyen Manh Hung, chairman of the Vietnam Automobile Transportation Association, said fares rely on input costs which are sometimes too high in Vietnam compared to other countries.

For example, the price of a car here is twice or three times that of other countries because it is subject to so many taxes and fees, Hung said.

If the car is used for taxi services, its high price translates to high fares, he said.

A conference on the auto industry in Hanoi on September 27 pointed out that five taxes and nine fees are currently imposed on cars in Vietnam, including a luxury tax.

Other inputs like fuel, accounting for 45 percent of fares, road fees, accounting for 10-20 percent, and wheels, accounting for 10 percent, have "continuously" increased in recent years, says Thai Van Chung, general secretary of HCMC Association for Goods Transportation.

Wheel prices, for instance, have risen threefold over the past four years, even though rubber prices kept falling, Chung said.

The fares will increase more in the future as businesses take into account road maintenance fees that the Transport Ministry started collecting from June 1, Hung said.

Another reason for Vietnam's high fares is that local businesses have to import wheels and other accessories for their vehicles, which are also subject to high taxes, said Pham Minh Suong, chief of the business development department with Mai Linh Group, one of Vietnam's leading providers of taxi and transportation services.

And after paying all the fees, transport companies still suffer the impacts of poor infrastructure, which affects their business badly, given the longer time taken to reach destinations and the wastage of fuel involved, said Le Truong Sang, head of sales at the Phuong Trang Tourism and Transport Joint Stock Company.

Poor infrastructure also hastens vehicles' depreciation as they wear out easily, he added.

One man who drives a bus on the HCMC-Vung Tau route said it takes two hours and 45 minutes to cover the 120 kilometers, but nearly half the time is spent on a section which is less than 30 kilometers long, when entering or leaving the city.

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