Vietnam Airlines has submitted formal recommendations to amend the draft Law on Civil Aviation of Việt Nam, calling for the removal of the airfare ceiling and proposing that the national flag carrier be granted priority in take-off and landing slot allocations.
In its latest feedback to authorities, the airline argued that eliminating the current airfare cap would give domestic carriers greater pricing flexibility, enabling them to better respond to fluctuating market conditions. Vietnam Airlines has repeatedly raised the issue, with increased urgency in the aftermath of the COVID-19 pandemic.
While awaiting broader legal revisions, the carrier has also advocated for a temporary increase to the current fare ceiling as an interim measure to allow airlines more leeway in adjusting domestic ticket prices.
Airfare Caps Remain a Regulatory Barrier
Under existing regulations, maximum airfares are governed by the Law on Prices. The Ministry of Construction, the body overseeing the law’s drafting, stated that domestic passenger air transport continues to be classified as an essential service, requiring government price controls under Point d, Clause 1, Article 21 of the legislation.
According to the ministry, airfare ceilings are necessary to ensure equitable access for the public and to curb the potential for price manipulation in a market heavily influenced by a small number of players.
Despite the presence of six airlines operating domestically, Vietnam Airlines and Vietjet Air account for the majority of market share. This concentration, officials argue, warrants the application of both maximum and minimum fare limits to prevent abuses of market dominance.
Associate Professor Dr. Ngô Trí Long emphasized that when a business holds significant market power, the government must impose price ceilings to protect consumers. Conversely, price floors are appropriate when the buying side holds dominance, ensuring fair compensation to sellers.
“In Việt Nam’s aviation market, the dominant positions of Vietnam Airlines and Vietjet Air justify the government’s use of a pricing framework,” Long said. “This framework prevents either company from raising prices excessively or undercutting competition in ways that could be detrimental to consumers.”
Push for Preferential Slot Allocation
In addition to fare policy reforms, Vietnam Airlines has proposed changes to airport slot allocation policies. Specifically, the airline is requesting legal provisions that would guarantee “priority access to slots for the national flag carrier.”
The Ministry of Construction responded by saying the request would be reviewed during the law’s drafting phase, taking into account international standards and local market conditions.
Although the term “national airline” carries symbolic and strategic significance, the ministry noted that its legal definition and associated entitlements differ widely across countries. Any preferential policy related to slot allocation, it added, would need to be specified in the decrees implementing the revised law.
The ministry stressed that future slot management policies must aim to maximize airport capacity and ensure efficient resource use, particularly as Việt Nam prepares to expand its airport infrastructure.
Industry analysts have previously cautioned against granting any carrier preferential access to high-demand airport slots, such as those in early morning and evening hours. These peak periods are critical to airline profitability due to elevated passenger demand.
Calls for Comprehensive Legal Overhaul
The current Law on Civil Aviation has been in effect for nearly 20 years and has helped Việt Nam align with global aviation safety and regulatory standards. It has enabled Vietnamese airlines to operate in major international markets, including North America and Europe. The country is now recognized as a regional leader in aviation safety oversight by several international organizations.
However, the law is showing its age and limitations. It lacks clear definitions of the responsibilities and powers of aviation authorities and does not sufficiently separate accident investigation from regulatory functions. The role of aviation safety inspectors is also inadequately defined.
To address these shortcomings and bring the legal framework in line with international norms and the evolving needs of the industry, the Ministry of Construction acknowledged that a thorough revision of the law is essential.
