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Vietnam transport ministry rejects proposed floor price for airfares

Vietnam transport ministry rejects proposed floor price for airfares

Saturday, May 06, 2017, 14:15 GMT+7

Vietnam’s Ministry of Transport has officially commented on a proposal backed by two local airlines that minimum price be set for domestic airfares, saying for no reason should carriers be stopped from competing on cheap tickets.

The price floor for domestic airfares has been proposed by Jetstar Pacific and supported by Vietnam Airlines, which holds a 70 percent stake in the former carrier.

The two carriers apparently called for help from the transport ministry to deal with tough competitions from low-cost rivals.

No-frills Vietjet has openly opposed to the idea, saying the price floor is against both Vietnamese law on competition and international practice, as no country is currently imposing such price controls.

During a meeting on Friday, Minister of Transport Truong Quang Nghia said the proposed floor price for airfares will never be realized.

“The ministry’s stance in this issue is to keep the current pricing policy for air tickets unchanged,” Nghia said.

“Alternatively, we must increase the effectiveness of the state supervision and management on the aviation sector.”

The transport ministry said if an airline is capable of slashing its own ticket prices, “why should we not allow them to do so?”

“What regulatory body should do is to check if the discounted airfares and promotional ticket sales are done properly or not,” the minister added.

Nghia added that the aviation sector should focus its management on infrastructure to ensure service quality for passengers.

While the aviation infrastructure remains unchanged, the number of Vietnamese to travel by air has constantly increased, putting pressure on the management bodies.

The transport minister hailed the Civil Aviation Authority of Vietnam for “doing a good job” in the Lunar New Year late January, the busiest season for local airlines.

The aviation watchdog has applied several effective measures such as increasing late-night services while reducing the number of flights during rush hours to avoid overloading, according to the minister.

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