All three airlines, Vietnam Airlines, Vietjet Air and Jetstar Pacific, have asked for permission to raise airfares, citing fuel price increases.
Tran Thanh Hien, chief accountant of Vietnam Airlines, said at the 2018 shareholders’ meeting of the corporation that fuel alone amounts to 30-38 percent of total expenses.
With Vietnam Airlines’ operation scale, when the oil price goes up by one dollar, its total expenses will increase by VND230 billion a year.
The attempt by airlines to raise airfares has faced criticism from the public.
Nguyen Phuong Thao, an office worker in Hanoi, said the airlines should improve the quality of services if they raise airfares. She cited a report of the Civil Aviation Authority of Vietnam (CAAV) as showing that of 177,510 flights scheduled by the three air carriers in the first seven months of the year, 26,578 were delayed or canceled.
Dang Dinh Dao from the Hanoi Economics University noted that the proposals raising airfares have been made in the context of three airlines reporting high profits.
The private Vietjet Air had VND8.637 trillion in revenue in the second quarter, an increase of VND3.1 trillion, or 52 percent, compared with the same period last year. In the first half of the year, Vietjet had revenue of VND21 trillion and made a profit of VND2 trillion.
Meanwhile, Zing quoted a source from Jetstar Pacific as reporting that in the first seven months of the year, the air carrier made an impressive profit, which was six times higher than planned after many years of taking losses.
Despite the fuel price increase and the greenback appreciation, the total expenses of Jetstar Pacific were one percent lower than planned.
Vietnam Airlines, the national flag air carrier, also experienced a prosperous H1. Its post tax profit in the second quarter was VND309 billion, or four times higher than that of the same period last year.
The fact that airlines make fat profit but still attempt to raise the airfares, as Dao commented, shows bad management of state agencies.
Nguyen Thien Tong from the HCMC University of Science & Technology commented that air carriers always complain and insist on raising airfares when the oil price increases, but they keep airfares unchanged when the price decreases.
Tong said he does not see firm arguments and convincing evidence for the airfare adjustment.
“Once three airlines want to raise airfares, this will generate a monopoly and violate the competition principle,” he said.
CAAV thinks it would be better not to raise airfares this year as the government is making every effort to curb inflation.
According to a report on Vietnamnet