Airlines Cut Flights Amidst Soaring Jet Fuel Costs, ACV Seeks Revenue Stability

The Vietnamese aviation sector is facing significant headwinds as airlines grapple with soaring operational costs, primarily driven by the global jet fuel crisis. The ongoing conflict in the Middle East has severely disrupted the supply chain for Jet A1 fuel, leading to unprecedented price hikes. This has forced domestic carriers to scale back operations, prioritizing major domestic and international routes while cutting back on less profitable or off-peak flights.

Compounding the issue, Vietnam's domestic jet fuel supply only meets about 20% of demand, making the country heavily reliant on imports from countries like China, Thailand, and South Korea. However, these nations are increasingly restricting exports, and some suppliers have even notified of delivery delays, citing supply chain disruptions and invoking force majeure clauses. This precarious supply situation, coupled with volatile global energy markets, puts immense pressure on airlines.

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The number of take-offs and landings at ACV-managed airports has decreased significantly.

In response, airlines are implementing strategies such as consolidating flights, optimizing passenger load factors, and even temporarily suspending services on certain routes. The knock-on effect is a significant increase in domestic airfares, with average prices rising by 15-20%, largely due to the elimination of cheaper fare classes. This, in turn, is dampening travel demand, particularly in the leisure tourism segment. Vietnam Airports Corporation (ACV) is now exploring measures to stabilize revenue, including developing non-aviation services and implementing demand-stimulation policies to attract airlines, especially with the upcoming opening of Long Thanh International Airport.

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Domestic airfares have increased by an average of 15-20%, mainly due to airlines closing off cheap fare classes.