Minister of Transport 'blows the whistle' to block proposal to impose floor price on airline tickets

The proposal to apply a floor price for air tickets has just been blown up by the Ministry of Transport when it directed to maintain the current regulations on air ticket prices (floor price is 0 VND, ceiling price is managed by the management agency in each period).

Referring to the regulation of ceiling and floor prices for air tickets in the Party Committee meeting, Mr. Truong Quang Nghia - Minister of Transport affirmed: "The Ministry's viewpoint is not to change the current regulations on air ticket prices but to further strengthen the role of state management in flight operations. If airlines can reduce ticket prices, why not allow them to reduce them? The job of state management is to check and control whether the price reduction, low price launch, promotional price is correct or not, and whether the implementation method is in accordance with the law?".

The Ministry of Transport directed to maintain the current regulations on airfares (floor price is 0 VND, ceiling price is set by the management agency for each period).

The head of the Ministry of Transport believes that it is necessary to change the approach in management and must start from the infrastructure. To the extent that the infrastructure can meet the requirements, there must be management solutions to ensure maximum safety and security, ensure service quality and if airlines can reduce airfares, there is no reason to set a floor price to stop them.

Thus, the regulation of the floor price being 0 VND and the ceiling price set by the management agency for each period will continue to be applied and officially close the story that has caused a stir in public opinion in recent times.

Previously, in March 2017, Vietnam Airlines and Jetstar Pacific sent a document to the Ministry with comments on the airfare framework and proposed that the lowest economy class fare (floor) for a domestic flight be 1.54 million VND, the highest (ceiling) be 4.2 million VND, while Jetstar Pacific proposed to apply a floor price from 0.6 to 1.2 million VND depending on the flight route.

The floor price is set at 0 VND, the ceiling price set by the management agency for each period continues to be applied.

On the contrary, Vietjet Air believes that there should be no regulation on the floor price of domestic air tickets because in any form, this is not in accordance with the provisions of the Competition Law. In the first quarter meeting of 2017, the Ministry's leaders still left open the possibility of applying a floor price for air tickets when Deputy Minister of Transport Nguyen Hong Truong said that the Civil Aviation Authority is studying 3 price framework options including keeping the current price or increasing the floor price to higher than 0 VND, removing the ceiling price or removing both the floor price and the ceiling price.

The Director of the Civil Aviation Authority said that the fare framework has now been included in the Aviation Law, and the National Assembly still decides on the ceiling price to regulate prices, although many opinions say that current economic conditions should not apply the ceiling price and that even though the economic market is free, the state still has the right to fight against unfair competition and price dumping.

According to Labor Newspaper