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Tuesday, August 9, 2022

Fuel price spike sends airfares skyrocketing

The Saigon Times

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HCMC – Airlines have been continuously increasing airfares due to soaring fuel prices and the strong travel demand in the summer season.

It is almost impossible to buy cheap air tickets at the moment. Tickets get more expensive closer to the departure date.

Some flights to popular tourist destinations are even potentially sold out. Most domestic flights from July to the end of August 2022 have increased prices, Tuoi Tre newspaper reported.

Information on the websites of five domestic airlines shows that if guests buy a ticket from the end of June to depart from HCMC and Hanoi to the tourist destinations of Phu Quoc Island, Nha Trang and Danang in mid-July, the cheapest airfare is over VND1.3 million, up 20-30% compared to the previous month.

For the Hanoi-Danang route, Vietnam Airlines offers the cheapest ticket worth VND1.5 million that is available in the early morning or late evening hours, while at Vietjet and Bamboo, it costs from VND1.3 million to VND1.5 million a ticket.

Similarly, Vietnam Airlines is opening direct flights from Hanoi to Phu Quoc whose airfares are over VND2.5 million per ticket at night. For the HCMC-Phu Quoc route, a single ticket by Vietjet and Bamboo is priced at VND1.7-2.3 million and VND2-3 million, respectively.

That means, one passenger must pay double for a round ticket.

A representative of WorldTrans said that the airfares for international flights to and from Vietnam have increased by 20-35% compared to before the pandemic due to the increasing travel demand and fuel prices.

For instance, the route from HCMC to South Korea is priced at VND9-13 million per ticket while it costs from VND18 million to VND27 million a ticket on average for the HCMC – Europe flight and from VND41 million to VND51 million a ticket for the HCMC-U.S. flight.

The airfare from HCMC to Singapore is VND2.4 million a ticket for June 30 and more than VND4 million a ticket for July 8. The airfare from Hong Kong (China) to London (UK) by Cathay Pacific Airways in June 2022 is some HKD42,051, equivalent to US$5,360, five times higher than before the pandemic outbreak. A direct flight from New York to London is priced at more than US$$2,000.

According to a representative of Asiana Airlines in Vietnam, airfares this summer are more expensive mainly due to the sharp increase in fuel prices. Due to the fuel price pressure, fare incentive programs almost disappear.

In this situation, airlines in Vietnam said they plan to increase flights in the summer to meet travel demand.

For example, in the peak of summer, Vietnam Airlines operates 430 flights a day and Vietjet 450 flights a day. Most of the flights are domestic ones. Statistics on booking websites show that airlines record a sharp increase in the number of tourists traveling in summer, even surpassing the time before the pandemic outbreak.

Dang Anh Tuan, head of communications of Vietnam Airlines, said the national flag carrier is entering a period of recovery. The summer peak is the fulcrum for airlines to resume strongly.

However, fuel prices are shooting up, forcing airlines to increase operating costs. Other airlines also admit that the airfare spike induced by soaring fuel prices is inevitable.

Vu Duc Bien, general director of Vietravel Airlines, said aviation has recovered quickly. The airline has mapped out plans for this summer apart from increasing its fleet to prepare for opening international flights later this year. The new player of the aviation industry expects to see a boom in business, but rising fuel prices are making things difficult.

“The price of Jet-A1 jet fuel has reached about US$140 a barrel, creating a huge challenge for airlines. In this context, it is very difficult to reduce airfares. If the fuel price cools down to US$80-100 a barrel, airfares will be correspondingly adjusted,” Bien said.

According to experts, airfares are affected by two factors, including fuel prices and labor costs. The industry is now at its peak, but players are facing a risk of labor shortage. Vietnam Airlines, Vietjet, Bamboo Airways, etc. are aggressively recruiting flight attendants and pilots with high salaries and benefits. But the results are modest.

Serving more than 50 international airlines, Saigon Ground Services JSC has conducted six recruitment rounds in the last three months, but it has been tough to secure enough staff.

According to the International Air Transport Association, fuel prices account for 30-40% of an airline’s total costs. As fuel prices rise, many airlines around the world have raised fares to cover costs.

The high airfares are becoming a barrier for travel. Tour operators say the prices of tourism products have increased by some 5-10% depending on the routes due to increased transportation costs.

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