Vietnam Insider

The issue of high domestic airfares in Vietnam is nothing new, but it continues to spark widespread concern, especially as the peak summer travel season unfolds.

A recent Dân trí survey found that round-trip fares from Hanoi to Phu Quoc in early July are nearly double those for flights from Hanoi to Busan in South Korea. Similarly, tickets from Hanoi to Nha Trang cost between VND 4 million and 6 million, roughly twice the price of flights from Hanoi to Bangkok, which range from VND 2 million to 3 million. Vietnam Airlines’ round-trip fares from Hanoi to Phu Quoc can reach up to VND 9 million per passenger, while Vietjet Air fares on the same route have at times exceeded VND 8 million. These figures far surpass the costs of flights to destinations such as Taiwan or Kuala Lumpur.

Faced with such steep prices, many Vietnamese travelers are opting for overseas trips this summer rather than exploring domestic destinations.

According to Dr. Pham Huong Trang, a tourism lecturer at RMIT University Vietnam, domestic airfares in Vietnam have reached abnormally high levels, creating a paradox where flying within the country costs more than many international routes. She attributes this situation to several factors, including surging input costs. Jet fuel prices in Asia currently hover around USD 100.25 per barrel (as of April 26, 2024, according to IATA), and fluctuations in the USD/VND exchange rate have pushed up costs related to aircraft leasing, foreign pilots, and maintenance services. The situation has been exacerbated by the grounding of 33 aircraft in Vietnam for over a year due to Pratt & Whitney engine recalls, which has slashed the country’s narrow-body fleet by 20 to 25 percent and created significant supply shortages during the domestic travel peak season.

Other challenges include the longer average distance of domestic flights in Vietnam — typically two to 2.5 hours, compared to one to 1.5 hours in countries like Thailand — as well as the burden of more than 20 types of direct and indirect taxes and fees. The domestic aviation market is concentrated among a small number of major carriers, limiting competition, while high maintenance costs, as most work must be done abroad, add to the problem.

As a result of these factors, many travelers who would otherwise prefer local destinations have turned to international options. Dr. Trang noted that the lack of strong coordination between the aviation and tourism sectors has failed to create the competitive pressure needed to bring down airfares. The outcome is a troubling paradox: domestic tourism now costs more than many overseas trips. This not only harms the tourism industry but also undermines the overall competitiveness of the economy and contributes to inflationary pressure on transportation costs. For destinations such as Phu Quoc, Con Dao, or the Central Highlands, airfare can account for 40 to 60 percent of the total tour cost, making domestic packages comparable to, or even more expensive than, tours to Thailand, Malaysia, or South Korea. Meanwhile, domestic flight service quality remains inconsistent, with delays and cancellations still common, prices fluctuating significantly by season, and fewer promotions compared to international carriers.

Dr. Trang pointed out that countries like Thailand and China have successfully implemented strategies that balance affordable access with increased spending at the destination. Their tourism models operate as seamless ecosystems, where airlines, hotels, destinations, local communities, and service providers work in close coordination. This ensures that visitors not only come but are eager to return and are willing to spend more because they perceive the value as worthwhile. The key lesson is clear: low airfares draw in tourists, who then contribute more to the local economy through their spending, creating a positive economic cycle that supports both tourism and aviation. Thailand has invested more than USD 400 million in tourism stimulus programs, reducing airport fees, subsidizing fuel, and upgrading infrastructure. China has adopted a “cheap ticket, high spend” strategy, using low airfares to attract visitors while investing heavily in destination experiences.

To improve the situation in Vietnam, Dr. Trang stressed the need for comprehensive and coordinated action. She called for major government stimulus measures to support aviation and tourism, including temporary reductions or waivers of airport fees and targeted subsidies for strategic domestic routes. Transparency in airfare pricing is also essential so that consumers better understand the factors behind fare levels and avoid misperceptions about unreasonable price hikes. Airlines must step up by increasing capacity, expanding networks, diversifying offerings, and providing more flexible and competitive pricing, especially for early bookings, rather than focusing on high last-minute fares. She also advocated for integrated tour packages that combine flights, accommodation, dining, and local services to create more attractive and competitive options for travelers.

At the same time, the focus should not be solely on reducing prices. Vietnam must work to enhance service quality and enrich the overall tourist experience with unique cultural attractions, exceptional cuisine, high-quality entertainment, and community and eco-tourism options that encourage greater spending at the destination.

In the longer term, the country needs to invest in upgrading airport infrastructure, developing secondary airports to boost competitiveness and connectivity, and building a strong national tourism brand. Effective international marketing campaigns will help attract foreign visitors, indirectly supporting domestic routes by allowing airlines to balance their operations more effectively.

Ultimately, Dr. Trang emphasized that all these solutions must be implemented in unison to create a positive, sustainable tourism ecosystem. By delivering high-quality experiences, unique offerings, and a strong brand, Vietnam can attract international travelers while retaining domestic ones, ensuring lasting growth for both aviation and tourism.

Vietnam’s tourism sector has set ambitious goals for 2025, aiming to welcome 22 to 23 million international visitors, serve 120 to 130 million domestic tourists, and generate total revenue of VND 980 trillion to 1,050 trillion (approximately USD 40 billion). The year is expected to mark a significant milestone in the sector’s recovery following recent disruptions.