Vietnam’s aviation authority has asked the Ministry of Transport to push fares on certain domestic Vietnam Airlines flights below the reduced cap as global fuel prices fall.
The Civil Aviation Authority of Vietnam (CAAV) has suggested that the Ministry of Transport cut economy fares on short-haul domestic flights by more than 23 percent from the current VND1.7 million (US$79.5) maximum to VND1.3 million ($60.8).
On December 19, the Ministry of Finance approved the CAAV proposal to lower the cap on domestic economy-class airfares that cover less than 500 kilometers by 15 percent in 2015.
The recommendation came after the authority found that the drop in international oil prices had cut the carrier's costs by 17 percent.
The CAAV said several short routes remain prohibitively expensive for the airline's target customers.
The routes that will be affected by the cost cut include Hanoi – Na San (in the northern mountainous province of Son La), Ho Chi Minh City – Can Tho/Ca Mau/Con Dao, Vung Tau – Con Dao, Can Tho – Con Dao, Da Nang – Vinh/Pleiku/Quy Nhon/Dong Hoi.
The CAAV will make further price reduction recommendations on other routes this week.
The 2011 fare caps for flights between 500 and 1,280 kilometers range between VND2.25 million to VND4 million.
Most carriers charge between 70 and 84 percent of the cap, according to CAAV.
“The fare reductions will consider several factors, like the number of customers, to make sure the carriers continue to profit and the customers benefit from the reductions in the price of oil,” a CAAV official told news website VnExpress.