Can Tho provides subsidy to airlines flying to city

The Mekong Delta city of  Can Tho plans to open more domestic and international flights to the city by giving subsidies to airlines, with a maximum subsidy of 8.5 billion VND (375,000 USD) a year, said a local official.


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Can Tho International Airport in the Mekong Delta city of Can Tho.


Vo Thanh Thong, chairman of the Can Tho People’s Committee, said the city had worked with the Civil Aviation Administration of Vietnam (CAAV) to open new routes to Hai Phong, Cam Ranh and Bangkok by the end of this year.

Can Tho is drafting policies to provide support to airlines that open flights to the city, including initial support for office rentals, promotions, ground service fees and financial aid for vacant seats.

Airlines opening new routes to and from Can Tho will enjoy incentives such as 12 months of office rental at a maximum subsidy of 15 million VND (660 USD) per month per company.

Ground service fees will be halved in the first year for domestic flights, while international flights will receive an additional 30 percent discount in the following year.

The city will also subsidise the first year’s losses for the airlines, at a maximum of 5 billion VND for domestic flights per year, and a maximum of 8.5 billion VND for international flights per year.

To promote tourism development, the city has asked competent agencies to encourage travel firms to offer preferential prices for tourists traveling by air to the city.

Can Tho International Airport has domestic flights to Hanoi, Phu Quoc, Con Dao and Da Nang.

Meanwhile, routes connecting the city with Da Lat and Cam Ranh (Nha Trang) have been suspended due to losses.

For international routes, flights from the city to Taipei are only operated during Lunar New Year holidays, while chartered flights to Bangkok have been suspended.

The city plans to open three new domestic flights to Vinh, Da Lat and Cam Ranh and five new international flights to Bangkok, Singapore, Seoul, Taipei and Tokyo by 2020, according to Thong.

Airlines’ reaction

In response, airlines do not appear to be interested in the move, saying flights to Can Tho are not attractive due to low demand. Opening new flights, they said, would not recover capital unless the rate of occupancy of seats reached 70 percent.  

A representative of the budget airline Vietjet said flights to Can Tho were not an attractive route compared to other domestic routes.

Meanwhile, a representative of Jetstar Pacific, said that if there was demand, it would run a new flight without needing a subsidy.

The airline opened a flight from Hanoi to Can Tho in 2009, but it was suspended due to low demand.

Economist Bui Quang Tin said it was not rational to use the State budget to subsidise new flights to Can Tho.  

“Many airlines want to open flights in Vietnam. Why do we have to use the State budget to subsidise flights while the budget is now limited,” Tin said.

Vo Huy Cuong, deputy head of the CAAV, said the city must study the demand and potential of the new flights to Can Tho before making a decision.

If there is a potential, the new flights to Can Tho would help ease the burden for Tan Son Nhat international airport, which is now seriously overloaded, he said.

Last year, the number of visitors to Can Tho grew 14 percent year-on-year to reach 5.3 million, including more than 590,000 foreign visitors.

Total tourism revenue reached 1,826 billion VND (80 million USD), a rise of 5 percent over the previous year.

VNA

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