‘Vietnam Airlines must reform to compete, not demand to return to the monopoly era as before’

Vietnam Airlines recently launched a series of proposals on floor prices, ceiling prices with air tickets, as well as claiming 100% of international flight slots in the next round. Experts say that Vietnam Airlines wants to return to the “one market alone” period in order not to have to compete with private firms.

‘Vietnam Airlines must reform to compete, not demand to return to the monopoly era as before’Vietnam Airlines Airbus A321 aircraft at Noi Bai. (Photo: Song Ngoc).

The floor price is only beneficial for Vietnam Airlines

Vietnam’s aviation market over the past 10 years has undergone obvious changes. From being alone Vietnam Airlines, customers can now choose younger private airlines such as Vietjet Air, Bamboo Airways or Vietravel Airlines.

Talking with the writer, Assoc. TS. Nguyen Thien Tong assessed that the competition in the Vietnamese aviation market over the past time has improved a lot, Vietnam Airlines itself has also improved a lot compared to its monopoly time. Therefore, if the floor price of the plane ticket is applied, the competition will be reduced and the market will suffer a setback.

Mr. Tong said that the ceiling price mechanism for air tickets is a remnant of the past when Vietnam Airlines was a monopoly. Currently, the market has competition among airlines so it is not necessary to set the ceiling price, so it is better not to raise the ceiling price as proposed by Vietnam Airlines, but to leave it completely.

“Airlines that foolishly raise prices, just lift, passengers will choose other airlines that are cheaper,” Mr. Song said. “Competitive market rules will adjust prices. The floor price will only benefit Vietnam Airlines. […] The floor price offered by Vietnam Airlines is very high, if applicable, many people are not allowed to travel”.

Currently, the State does not regulate the floor price and the airlines sometimes still have promotions with tickets priced at 0 VND.

According to the plan that Vietnam Airlines offers, the floor price and the ceiling price will change according to the distance of the flight sector. The lowest floor price is 414,000 VND / ticket for a section below 500 km and the highest is 1.4 million VND / ticket for a leg of over 1,280 km. The proposed ceiling price will increase from 50,000 VND to 250,000 VND / ticket compared to the present.

Assoc. TS. Ngo Tri Long said that the Vietnamese aviation market has limited competition, the number of airlines is not much, so it may still be necessary to have a ceiling price to prevent the possibility of the airlines colluding with each other to raise prices. However, before proposing to increase the ceiling price, TS. Long suggests to exercise extreme caution so as not to harm consumers.

Regarding the application of the floor price, Mr. Long also affirmed that this proposal violates the laws on price and competition, is unreasonable, and certainly cannot be approved.

‘Vietnam Airlines must reform to compete, not demand to return to the monopoly era as before’Passengers check in at the Bamboo Airways counter. (Photo: Song Ngoc).

TS. Nguyen Thien Tong added: “In April 2017, Vietnam Airlines proposed to apply the same floor price as now, but the Department of Aviation and the Ministry of Transport at that time was very wise and disagreed. Today’s disease, the agencies have to be more wiser and reject this proposal to help all airlines recover.

Need equality for private firms

In addition to the proposed ceiling-floor price, Vietnam Airlines also wants to be allocated 50% of domestic flight slots and 100% of international flight slots in the next round. Expert Nguyen Thien Tong said that this proposal, if implemented, would cause great injustice for other airlines and create a monopoly for Vietnam Airlines.

“International flight is much more profitable than domestic flight. If we let Vietnam Airlines monopolize international flight, the market will return to ancient times, the fare is very expensive,” said Tong.

The expert also pointed out that Vietnam Airlines has been approved by the National Assembly and the Government for a loan package to support a liquidity of VND 4,000 billion at a very low interest rate, while other airlines want but not receive similar support.

‘Vietnam Airlines must reform to compete, not demand to return to the monopoly era as before’Airline ticketing counters at Phu Cat airport, Binh Dinh province. (Photo: Song Ngoc).

“The National Assembly and the Government should offer a joint relief package to airlines to create a level playing field, i.t.m. state or private airlines. Vietnam Airlines needs to reform management so that it is strong enough to compete, not relying on mechanisms such as the old-fashioned, exclusive regime”.

Mr. Song also said that Vietnam Airlines is currently the largest and strongest airline but not strong in competitiveness but strong thanks to mechanisms and bias. “Vietnam Airlines alone in the market for many years, should have been better than other airlines, over here demanding preferential policies for themselves and being unwise for others. Vietnam Airlines needs to reform to be able to compete fairly and equally with private airlines”.

Source: vietnambiz.vn – Translated by fintel.vn

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