CAAV calls for air fare cuts as oil prices plummet

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Passengers check-in for Vietnam Airlines flights at Noi Bai Airport in Hanoi on November 11, 2014. Photo: Hoang Dinh Nam/AFP Passengers check-in for Vietnam Airlines flights at Noi Bai Airport in Hanoi on November 11, 2014. Photo: Hoang Dinh Nam/AFP

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Vietnam’s aviation agency has called for a 15 percent cut in economy-class domestic air fares due to the global dip in global oil prices.
On Monday, the Civil Aviation Authority of Vietnam (CAAV) asked the Ministry of Transportation to appeal to the Finance Ministry to reduce the cap on airfare from the current VND5,000 (23 US cents) per passenger per kilometer to VND4,250, news website VnExpress reported.
The current cap was calculated based on cost matrix under which A1 Jet fuel cost $130 a barrel.
A global drop in the price of oil dragged Jet A1 prices down to $84.7 a barrel on Asian markets in December, and $90.63 a barrel in Vietnam (due to a seven percent import tariff), the CAAV noted in its suggestion.
“Given these fluctuations, the domestic fare cap on economy-class tickets should be adjusted accordingly,” the agency said.
Fuel accounts for around 39.5 percent of carriers’ cost, and the gasoline price drop has reduced that cost by 17 percent, the agency said.

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