National Assembly deputies discuss ceiling and floor prices for air travel

Wednesday, May 24, 2023 07:39

Planes at Noi Bai International Airport in Ha Noi. — VNA/VNS Photo

Raising or keeping the current ceiling price and floor price for domestic air tickets remained a contentious issue among National Assembly deputies.

Deputy Tran Van Lam from the northern province of Bac Giang told reporters on the sidelines of the ongoing 5th session of the 15th National Assembly that deputies had been showing great interest in this particular issue.

Regarding the draft Law on Pricing, which has been put on the floor during this NA meeting, Lam said the law favoured the abolishment of the floor price, based on conditions of the current market.

Deputies stressed the importance of regulating domestic airfares. While ideally, the state should not have to intervene but rather leave it to the market to determine prices based on market principles, the domestic air travel market was not yet mature enough.

Lam said there were still monopolies in the market with a number of routes having just one operator. In addition, the state must still reserve the right to intervene in the market in the event of natural disasters and abnormal weather conditions that may distort the rules of supply and demand.

"We have observed over the years while there are many airlines in the domestic markets monopoly has yet to disappear," he said.

"There are routes with numerous operators with fair pricing and competition, while there are routes with just one operator. This is despite the aviation authority's encouragement for other airlines to jump in due to low demand and operational difficulty," he added.

In addition, demand for air travel tends to be heavily seasonal, with demand shooting through the roof during certain times of the year.

Deputies said even when demand is large it would not be easy for airlines to scale up their operations. Without the complete elimination of monopoly in the market, the state must continue to intervene to ensure the rights and benefits of consumers are protected.

Some argued that the floor price was still required to prevent unhealthy competition among airlines, preventing some bigger players from going below cost to eliminate all competition.

Regarding promotional events in which airlines advertised zero dong tickets, deputies said those were few and far between with very limited seats sold, which should be considered a marketing tactic. — VNS

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