VietNamNet Bridge – General Director of Pacific Airlines Luong Hoai Nam talked about providing flights on Tet and airfares.

Government raises ceiling airfare

Passengers can’t get enough flights for Tet; why don’t you increase the number of flights?

General Director of Pacific Airlines Luong Hoai Nam

Air tickets are running out because the demand has exceeded the supply. The demand for traveling increases by 30-40% in the months before Tet and airlines can only provide 10% more flights.

In fact, airlines dare not offer more flights, because the more flights airlines provide, the bigger losses they incur. The fuel price has increase by three times, while the ceiling airfare remains unchanged. The world’s oil price has reached the record level of $100 per barrel, while the ceiling airfare has been capped at VND1.5mil since 2001.

We have been trying to offer more flights and reduce costs by cutting unnecessary services, reducing the time for preparing for a flight to 30 minutes, and increasing flight frequency. However, air tickets are still lacking.

I myself feel unhappy with the air ticket shortage. Passengers have called me and said: “I really need a ticket to fly to Hanoi. I’m prepared to pay VND6mil.” Regrettably, I could not help.

What are your ideas to fix the problem?

In fact, it is not so difficult to fix the problem, if we have a suitable mechanism for airfare

If a suitable airfare mechanism is applied, airlines can increase the number of flights to meet increasing demand. In fact, our Tet coincides with Europe’s winter, when European people travel less, so we can charter aircraft from European firms for one or two months.

Currently, as there is not a suitable airfare mechanism, airlines do not want to increase the number of flights. Most Vietnamese airports serve two or three domestic flights a day, while Ca Mau, Ban Me Thuot and Da Lat serve only one per day.

I think that only when the ceiling airfare level is increased or simply removed, will we be able to settle the lack of tickets during Tet.

The Ministry of Finance has just permitted a raise in the ceiling airfare level to VND1.7mil for the Hanoi-HCM City route, commencing March 1, 2008. What are your comments on the decision?

This is the right decision. It allows airlines to offer diversified airfare and allows passengers to have more choices. Those, who have a lot of money, can enjoy the best service by paying more, and vice versa, low income earners will have to fly with minimum services.

As for Pacific Airlines, we now have six domestic routes and offer 11 different airfare levels, VND15,000 at the lowest, and VND1.5mil at the highest for an economy ticket for Hanoi-HCM City flights.

When the decision on raising the ceiling airfare level comes into effect, Pacific Airlines will open 8 more domestic routes. We will have flights to Da Lat, Buon Me THuot, Can Tho and Da Nang. By the end of 2008, we will open four more routes to Thailand, Singapore, Cambodia and Malaysia. As for the Hanoi-HCM City route, we will have 12 flights a day during the summer, which means one flight every hour.

How would you explain the fact that Pacific Airlines always offers low airfare, though the airline still suffers losses and asks to raise the ceiling airfare level? How would the decision on raising the ceiling airfare level affect the operation of a low cost airline?

We would incur losses if we did not apply a flexible business scheme. We have been trying to reduce the cost of training and operation and are working to use our aircraft most effectively. We sell tickets directly to passengers and particularly have been focused on selling tickets via the Internet because we don’t have to pay fees and commissions to booking agents. Also, we have cut some unnecessary services on short-distance flights.

I don’t think that the increase of the ceiling airfare level would affect Pacific Airline’s strategy to operate as a budget airline.

(Source: TBKTVN)