HANOI May 19 Vietnam will reduce the import
duty on fuel and oil products used in the aviation sector to 5
percent from 15 percent now to help domestic airlines avoid
raising airfares, state media reported on Monday.
The new duty would come into force 15 days after the
Finance Ministry's directive signed on Monday is published by
the government's Official Gazette, the VN Express e-newspaper
Fuel costs, which account for a third of Vietnamese
airlines' operating expenditure, have been driven up by rising
world oil prices, while the government said it wants to keep
prices of essential commodities including airfares unchanged
The Finance Ministry was seeking government approval to
delay a price rise of essential commodities such as
electricity, coal, cement, steel and air tickets which were
initially scheduled to start from July 1, the Labour Union-run
Lao Dong newspaper said on Monday.
The government has been forcing businesses to keep prices
unchanged to help ease pressures on the country's annual
consumer prices, which jumped 21.4 percent in April, the sixth
consecutive month of double-digit inflation.
Vietnam spent $3.76 billion to import 4.68 million tonnes
of oil products in the first four months of this year, a surge
of 70.2 percent in value from the same period last year while
the volume only rose 8 percent, the government has said.
Vietnam Airlines, the national flag carrier, said last
month that jet fuel prices in the first quarter of 2008 had
already jumped 20 percent from its projected price of $90 per
barrel for the whole of this year.
In early May Jetstar Pacific, formed from Vietnam's
second-largest Pacific Airlines in a partnership with low-cost
airline Jetstar of Australia's Qantas (QAN.AX) Airways Ltd,
said it has delayed indefinitely the launch of two domestic
routes due to higher fuel costs.
The problem with rising fuel costs faced by Vietnamese
airlines is not unusual in the aviation sector.
Cathay Pacific Airway Ltd (0293.HK), Hong Kong's dominant
airline, is considering cutting its money-losing routes amid
soaring fuel prices, South China Morning Post said on Saturday,
citing the airline's chief executive.
(Reporting by Ho Binh Minh; Editing by Michael Urquhart)