Vietnam Airlines is asking for a fare hike after the State Bank of Vietnam last month decided to allow the greenback to appreciate by 9 percent. Vietnam Airlines is the first carrier to ask for such increase. According to Vietnam Airlines General Director Pham Ngoc Minh, the airline had to cover 70 percent of its expenses in fuel, aircraft leasing and pilots’ salaries in foreign currency, and the rates have gone up. Carriers have been burdened with paying the extra costs since they are not allowed to increase their fares or collect fares in foreign currencies in their domestic flights. Because of this, Vietnam Airlines for one suffered a staggering $30 million loss in their domestic flights a year ago.

For Jetstar Pacific Airlines, Deputy General Director Ta Huu Thanh stated that the carrier had adjusted its fares when the exchange rate was at VND18,465 per dollar. Today, the exchange rate per $1 is at VND 20,850. Jetstar Pacific Airlines now charges a $35 fare per flying hour per passenger, much cheaper compared to $60 in some airlines in Thailand and even $75 in Malaysia. Fuel costs for the airline make up for about 45 percent of revenue from air fares. Other expenses have also risen due to high inflation. And like other airlines, Jetstar Pacific Airlines also wants to have an increase in their flight fares to avoid losses. It is targeting a 25% fare hike.

Mekong Air Chairman Doan Quoc Viet said that for its airline, fuel costs make up a large 50-60% of revenue from airfares while the exchange rate adjustment has increased expenses by 13-14 percent. Mekong Air has demanded a 20-50 percent fare hike so that it could generate at least 2-3 percent profits in order for the carrier to remain operational. According to CAVV Deputy General Director Luu Thanh Binh, the demands of the mentioned airlines are quite “reasonable” considering the current fares will most probably lead to losses. But given the current situation, with Vietnam already struggling with the high inflation, Binh further added that a 20 percent increase in plane fares would be the most “reasonable” compromise. Furthermore, the air fare hike must be approved by the Prime Minister Nguyen Tan Dung in order to take effect.