VietNamNet Bridge – The Ministry of Finance decided to lower the import tariff on fuel for airlines in a move to help domestic carriers ride out the tough time when the world's price of crude oil has amounted to new levels.

The import duty cut to 5% from the current rate of 15% will take effect 15 days after the announcement of the decision, which was signed by Deputy Minister of Finance Do Hoang Anh Tuan on Monday.

The decision comes out following the proposals of Vietnam Airlines and Jetstar Pacific, and the Tax Policy Department for a cut in the import tariff or exemption on air petrol as among measures for the carriers to better solve the money-losing problem with their domestic flights.

Actually, the carriers are seeking an import tariff break for air petrol in the wake of increasing fuel cost and given that the Government has agreed tax holiday and subsidies for the imported gasoline used by other means of transportation.

Earlier this year, Vietnam Airlines wrote to the Ministry of Finance asking for an import tariff exemption for air petrol, which is also known as Jet A1, as fuel accounted for more than 33% of operation bills of the national flag air carrier.

Jetstar Pacific has petitioned related authorities for import tariff incentives for air petrol as the low-cost carrier's chief executive officier Luong Hoai Nam said increasing fuel cost now took up to 55% of the total operation costs of flights.

Nam furthered fuel cost had tripled compared to 2001 when a barrel of crude oil was traded at only US$35, and had surpassed the payment for aircraft lease and purchase.

Higher fuel price has forced Jetstar Pacific to suspend two new domestic services scheduled for launch in this August, from HCMC to Dalat and Buon Ma Thuot and vice versa.

Vietnam Airlines said the price of Jet A1 reached new high of over US$140 a barrel last month, or 55% higher than forecast. The result is that this carrier has to project an additional fuel bill of VND2.2tril (over US$136mil) for domestic and international flights this year.

The extra payment makes Vietnam Airlines mull plans of saving fuel, restructuring domestic and international flights, and delaying and reducing investment in unnecessary projects.

Vietnam Airlines expected to save at least VND40bil when the tariff on air petrol imports went down to 5%.

(Source: SGT)