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Monday, June 24, 2024

Floor domestic airfares likely to be abolished

By N.Tan

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HCMC – A majority of National Assembly (NA) deputies have agreed to maintain the airfare cap but remove floor prices of domestic air tickets.

The NA Standing Committee said that removing the floor prices of domestic air tickets is necessary to encourage competition, reduce service prices, protect consumer interests, curtail social costs, and promote economic development.

Scrapping floor air ticket prices does not mean that unhealthy competition between air carriers is allowed, according to the NA Finance and Budget Committee.

Even if businesses lower their prices, they will still have to comply with the Competition Law. Removing the floor price does not affect airlines, as the floor price has been set at VND0 by the Ministry of Transport for years.

Moreover, it will assist in the development of the domestic aviation market, thereby increasing the number of people using air travel services and contributing to increasing state budget revenue.

On the other hand, the NA Finance and Budget Committee said that the domestic airfare cap is still necessary, as scrapping it will take away the Government’s tool to manage aviation services and make it hard for low-income earners to access air services.

Without a price cap, airlines can significantly increase prices of air tickets, particularly during peak hours.

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