Scrapping the price cap on air tickets will rob authorities of a tool to regulate the market and make aviation less accessible to people with low incomes, the government has said.
Without a price cap, airlines could bring prices to a very high level, especially on routes with high competition during prime hours, and this could have a negative impact on consumers, it said in a report to the National Assembly.
Although airlines and analysts have proposed that the price cap be removed so carriers can increase revenues amid rising input costs, the government does not support this change.
“Given the average income of Vietnamese, a price increase will reduce the access of passengers to airline services,” it said.
The government added that only when many airlines join the market and compete by bringing prices down can it scrap the price cap.
Vietnam’s air ticket price cap on domestic routes have not changed for eight years.
The Ministry of Transport, however, plans to bring it up on average 3.75% later this year.