Vietnam's Minister of Finance: Taxes and fees account for very little in air ticket prices

Minister of Finance Ho Duc Phoc said that taxes and fees are collected by the State according to regulations and account for very little in air ticket prices, the larger proportion is service fees managed by the traffic industry.

Airline ticket prices have increased by 15-20% depending on the route in recent times but are still lower than the prescribed ceiling. One of the reasons for the increase in domestic ticket prices is that the aviation market lacks aircraft, reducing supply capacity and the tax and fee rates collected by airlines account for 10-30% of the total ticket cost.

Sharing in the corridors of the National Assembly on the morning of May 23, Minister of Finance Ho Duc Phoc said that the proportion of taxes and fees in airline tickets is collected according to regulations and accounts for very little. In particular, the Ministry of Finance only collects 8-10% VAT and corporate income tax from airlines.

"Tax and fees in the price of an air ticket are a few cents, how much is a lot? We need to understand that the fees people say account for a high proportion in the ticket price are service fees such as parking fees, airport fees... managed by the transport industry," he said.

Minister of Finance Ho Duc Phoc spoke at the group discussion. Photo: Hoang Phong

In fact, in the airline ticket structure, airlines collect VAT on behalf of the State budget, about 8-10%. As for fees such as airport fees and security screening, companies collect them on behalf of Airports Corporation of Vietnam (ACV), the unit that manages and operates more than 20 airports across the country.

High airfare prices, affecting economic recovery, also received many comments from National Assembly delegates during discussions in groups. Mr. Bui Hoai Son, Standing Member of the Committee for Culture and Education, said that the State needs to clarify the causes of high ticket prices and solutions to stabilize them. Because high ticket prices reduce travel demand, affecting jobs in the tourism and hotel industry.

He compared that flights of equivalent length in Thailand have cheaper ticket prices than Vietnam. For example, from Bangkok to Phuket nearly 869 km, the ticket price of Air Asia is 768,000 VND, Thai JetAir is 796,000 VND, Thai Airways is 1.16 million VND.

While Hanoi - Da Nang is 757 km long, VietJet is 1.12 million VND, Vietnam Airlines is 1.58 million VND. "Our ticket prices are very high compared to Thailand," he said, suggesting a support package for airlines to have discount programs and support service fees at the airport.

In addition, the tourism and aviation industries need to cooperate closely, offering promotional products to help reduce air ticket prices. In the long term, Vietnam needs to invest in aircraft maintenance centers to lower service costs in this field.

According to him, the main reason is that Vietnam's aviation industry still lacks competitiveness; high aircraft maintenance costs and lack of cooperation between aviation and tourism. "Cooperation between the aviation and tourism industries is still strong, everyone does it, everyone benefits, no risk sharing," Mr. Son said.

Minister of Finance Ho Duc Phoc said that taxes and fees are budgets, so many countries want to increase public resources through raising tax rates. For example, at the recent APEC financial conference, the policy of the Finance Ministers of the countries was to increase the power of public finance and taxes to cope with population aging and epidemics.

In Vietnam, in the past 4 years, the Government has introduced many policies to exempt, reduce, defer taxes and fees of about 200,000 billion VND a year, "which has exhausted the people's strength".

Previously, at a recent conference on lowering air ticket prices, representatives of airlines said they collected exactly the price set by the State and had no ability to influence them. Therefore, airlines can only reduce operating costs such as labor and aircraft servicing.

To reduce input costs, all four airlines (Vietnam Airlines, Vietjet, Bamboo Airways, Vietravel Airlines) proposed that the State consider adjusting and reducing flight operating and landing fees; aviation fuel import fees or night flight surcharge exemption.

Source: VnExpress -  Anh Minh - Son Ha