Aviation and tourism industries fail to coordinate in peak travel periods

By TIN Media | Airlines Published 1 month ago on 13 April 2024
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MALAYSIA:

Rising airfares during peak travel periods, with no cooperation between the aviation and tourism industries, are making domestic tourism lose out.
According to research conducted by VnExpress, the prices of domestic flights between Hanoi and Phu Quoc for the April 28- May 1 long weekend for the Reunification Day and Labor Day is VND5.3 million ($211) for unfavorable hours (leaving at 3 p.m. and returning at 7 a.m.), and VND6.5 million for more favorable hours.

These prices are tripled the normal prices for the same flights, and there are not so many seats left available.

Similarly, the flight tickets between Hanoi and Da Nang for unfavorable hours (leaving at 6:25 a.m., returning at 11:25 p.m.) during the period cost VND4.3 million and for favorable hours, VND4.8 million.

The cost for the same flights a week prior would just be VND2.6 million.

With these increases in airfares, many travel agencies are worried about slow number of travelers for domestic tours, a common situation during the Reunification Day (April 30) holiday period.

However, aviation insiders said that airlines should not be blamed for the problem, and the public should adopt a more objective view.

Tran Huy Cong, head of business development of Viettravel Airlines, said that airlines have different bands of prices for each flight.

They use a computer algorithm to calculate the average revenue needed for a flight and the average seat-fill ratio of a flight. From there, the airlines would allocate the tickets by bands to utilize revenues accordingly.

Theoretically, for any period, customers could buy affordable flight tickets if planned. However, during peak travel periods like the Lunar New Year or the Reunification Day holiday, airlines face a dilemma, with one direction having a high demand and the return direction having insignificant demand.

For example, with Viettravel Airlines, the flight from HCMC to Phu Quoc always has a seat-fill ratio 20% higher than the flight from Phu Quoc to HCMC during these occasions. This imbalance in demand hikes up the prices, despite the airlines already taking some losses to make the increase in price more reasonable, Cong said.

"The issue of high-ticket prices during holiday periods will only be resolved if there is more balance between demands from two directions."

Cong said the biggest proportion of flight tickets is the cost of aviation fuel and the cost of the airplane, either rented or bought which together account for 60 to 70% of the ticket price. The rest are sales, airports, airways, and human resource costs.

Similarly, an aviation expert said that a domestic flight costs the airline approximately US$10,000, about 30% of which is fuel cost.

The airline also needs to pay the airplane's rental fee, insurance, flight crew's salaries, airport costs, and others, the expert said.


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