The CAA says current maximum domestic airfares were set by the Ministry of Finance when jet fuel was US$130 a barrel and it was tax free. The cost of each barrel including seven per cent tax is now US$90. The CAA says that the cost of fuel is about 40 per cent of an airline’s total operational expenditure.
Based on the drop in the cost of oil, the CAA added that it only costs airlines US$0.20 per kilometre to fly each passenger as opposed to the US$0.23 it did when oil prices were high. The petition finished off with the proposal that the fuel surcharges added to domestic fares should be reduced to reflect lower operating costs.
CAA officials noted recently that the fuel surcharge was an add-on to the base fare and could therefore be cut without any effect. Airline industry watchers say airlines are always quick to slap surcharges on when fuel costs rise, but tardy when it comes to cutting them when fuel prices decrease.
Vietnam says airlines should cut fuel surcharge
News in Asia
Air regulators in Vietnam say that the recent drop in the cost of fuel should be passed on to passengers and fares reduced accordingly. The national Civil Aviation Administration (CAA) is in the process of submitting a recommendation to this effect to the Ministry of Transport.