Vietnam orders lower fares

24 Dec 2014  2061 | World Travel News

HANOI Ministry of Finance has given the green light to the Civil Aviation Authority of Vietnam (CAAV) to reduce the fare ceiling by 15% on domestic services, effective 1 January.
CAAV chief Lai Xuan Thanh told local media that the finance ministry has agreed to apply a 15% reduction to the fare ceiling, which is currently capped at USD0.23, per passenger, per km.
The decision follows an evaluation based on fuel costs that suggested airlines were overcharging passengers by 17%.
inside no 7According to CAAV, the current price cap was based on A1 Jet fuel price when it was pegged at USD130 a barrel. But the fuel price dropped to USD84.7 a barrel in Asian markets, this December and USD90.63 a barrel in Vietnam after a 7% import tariff.
Fuel accounts for around 39.5% of airline costs.
The CAAV has issued detailed guidelines for fare reviews. Representatives from CAAV and local carriers said the new cap would not cause a significant impact on business as fares have already dropped 10% to 20% below the new cap.

sourced:ttrweekly.com 

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