Three-month domestic air fuel surcharge proposed as costs surge

HÀ NỘI — The Civil Aviation Authority of Việt Nam (CAAV) has proposed a temporary fuel surcharge on domestic flights as carriers struggle with surging jet fuel prices driven by global supply disruptions following Middle East’s tensions.The surcharge is proposed to apply to basic economy-class tickets on domestic routes for three months from April 1 to 30.In a report sent to the Ministry of Construction, the CAAV said that jet fuel prices have risen sharply amid ongoing tensions in the Middle East, with Jet A-1 prices in March averaging between US$190 and $200 per barrel and even touching above $230 per barrel on March 24.The CAAV said that Việt Nam’s jet fuel providers remain heavily dependent on imports, posing a significant risk as global supply chains face disruptions.Suppliers have committed to meeting demand for flight operations until mid-April 2026, the CAAV said, adding that airlines are continuing to operate under their Winter 2025-26 schedules, with no reductions in routes or frequencies so far.However, after that point, Jet A-1 availability cannot be guaranteed, and airlines may have to rely on spot purchases at significantly higher prices and may have to adjust flight networks and capacity to respond to rising Jet A-1 fuel costs.The report said that carriers are prioritising key domestic routes connecting Hà Nội – Đà Nẵng –HCM City, while seeking to maintain their presence in major international markets.Vietnam Airlines said it will suspend seven domestic routes from April 1, including Cát Bi –Buôn Ma Thuột and HCM City – Điện Biên, and may cut 700–1,700 flights per month in the second quarter depending on fuel price scenarios.Low-cost carrier VietJet Air plans to reduce total capacity by about 18 per cent in April, including a 22 per cnet cut in domestic services, and may adjust further if fuel prices keep rising.Other airlines are also scaling back operations.Bamboo Airways expects to halve its daily flights from April, focusing on core routes, while Pacific Airlines plans to cut capacity by 8-30 per cent in the second quarter.Despite cost pressures, airlines have sought to keep ticket prices stable during the current low-demand period, offering a wide range of fares. On the Hà Nội - HCM City route, low-cost tickets accounted for 81 per cent of sales in early March, up sharply from the previous period.The CAAV said that more than 60 per cent of international airlines have introduced or plan to introduce fuel surcharges or fare increases since mid-March.Fuel accounts for about 35-40 per cent of airlines’ total costs, and a doubling of Jet A-1 prices compared with pre-conflict levels could raise overall operating costs by around 40 per cent, the authority said.The Government has cut the environmental protection tax on jet fuel from VNĐ1,000 to zero from midnight on March 26 until April 15. — VNS