Transport ministry to raise airport service charges

The Ministry of Transport will increase service charges at airports to compensate for investment costs of the airport system and raise service quality.

According to a regulation issued last week, the take-off and landing charge will increase by 5 per cent from October 1, 2017 to June 30, 2018, on average. It will fluctuate based on rush hours, normal hours and off-peak hours. Specifically, the charge will be raised by 15 per cent during rush hours and reduced by 15 per cent during off-peak hours.

During normal hours, the take-off and landing charges will be VND698,000 (US$30.6) each time for ATR70 aircraft, more than VND1.5 million for A320 and A321, and more than VND5.8 million for A350, B787, B777 and A330.

The charge will be up by 10 per cent as of July 1, 2018.

Insiders said flight airfares will certainly increase following the transport ministry’s regulation, which was issued last week, because input costs are up.

A representative of budget airline Vietjet Air told Vietnam News Agency that the firm had yet to determine a method to raise airfares. However, the fare would go up when charges increased.

“We encourage passengers to buy tickets online directly, not through unofficial agents, to avoid buying tickets at higher prices,” representatives said.

Another representative from budget airline Jetstar Pacific said the hike would not greatly affect the firm’s airfares. The firm was currently selling tickets at 12-13 various levels from low to high, of which there were several levels lower than the average price and others higher than the average.

For example, there were some tickets priced at between VND300,000 and VND400,000, while others were for VND3 million (ceiling price).

“The adjustment of airport service charges will affect the firm’s airfares, but not much. We can adjust the average selling price up a little, following which the volume of cheap tickets will be narrowed,” the Jetstar Pacific representative said.

Chairman of the Airports Corporation of Vietnam Lai Xuan Thanh said the State had raised airport service charges, but the ceiling ticket price would not be increased. Therefore it would not affect customers much.

Thanh said domestic airlines’ operation had benefited significantly in terms of convenience in recent days thanks to the reduction in aviation petrol price, which had been stable for a long time, the high growth of domestic passengers and low service charges.

According to calculations, if the transport ministry’s adjustment on airport service charges becomes effective, airlines will have to spend an additional VND161.53 trillion per year, equivalent to VND4,531 per passenger, or 0.1 per cent of the ticket price.

With such a marginal increase, there is no reason for airlines to raise the average airfare. However, passengers will have to pay an additional VND30,000 for charges per capita.

According to experts, airlines need to publicly announce the hike in airfare and charges in detail, since most passengers do not know much about the charges and tax rates because ticket prices keep fluctuating.

VNA