Fair competition needed in aviation

There are mixed opinions not only from airlines but also experts regarding a draft Circular on the price of airfares on domestic routes, under which the minimum price is proposed to be equal to 20 per cent of the maximum price.

Some airlines had to reduce ticket prices in order to stimulate consumption during the difficult times caused by the pandemic, but steep reductions in ticket prices would cause distortions in the market picture, causing an imbalance between the price and the selling price, according to Associate Professor Dr. Nguyen Hong Thai, Vice Dean of the Faculty of Transport - Economics, at the University of Transport.

Economist Dr. Nguyen Minh Phong also warned that if the application of a price ceiling without a minimum price continues, it will promote price competition where airlines do not focus on improving service quality and convenience.

Moreover, in the past, when a floor price was not applied, there were still additional “floor charges” such as fees collected by airlines, services fees, and value added tax, which sometimes were higher than the floor price of VND320,000 ($14) according to the draft circular.

Therefore, the management agency should have the necessary tools to eliminate negative competition and ensure the interests of customers, encouraging increased customer service quality as a new competitive “weapon” of airlines.

When the Civil Aviation Authority of Vietnam (CAAV) consulted airlines on the draft Circular, they were divided into two groups and expressed very mixed views on the issue.