Travel firms fear higher airfare will deter tourists

Travel companies have urged government agencies to ask airlines to raise airfares gradually to allow travel firms to increase tour fees step by step, thus avoiding shocks to domestic travelers.
The Vietnam National Administration of Tourism (VNAT) will have a review of “Impressive Vietnam” by the end of January 2010. The tourism promotion campaign has been successful and has helped lure a large number of domestic travelers despite the economic crisis.
Now travel firms have a new worry that they may have to raise tour fees because of higher airfares.
Tran The Dung, Deputy Head of the HCM City Team on Domestic Travel Stimulus, said that the airfare for Hanoi-HCM City has risen to levels common before the “Impressive Vietnam” campaign. This means that even when booking tickets early, travel firms have to pay 2.6 million dong per return ticket at the lowest, and 3.4 million dong at the highest.
As such, travelers will have to pay 2 million dong more on airfares, and tour fees will be 7.2 million dong instead of 5.2 million dong. If counting the VAT increase to 10 percent and higher service fees, package tour fees will be 7.8-7.9 million dong.
If hotels raise their rates, tour fees could be as high as 8.3-6.4 million dong.
A director of a travel firm worries that once “Impressive Vietnam” ends, the market will fall into the hands of big companies with close relations to airlines, or those who have air ticket booking agents. If so, small and medium travel firms will face difficulties because they cannot obtain low cost air tickets.
If tour fees go up as expected, it would be more costly to travel domestically from the north to the south than to go to Thailand, China or Cambodia.
According to Nguyen Cong Hoan, Deputy Director of Hanoi Redtours, regional countries are luring travelers with cheap tour packages, while they aim to encourage tourists to spend money once they arrive.
Vietnamese travelers have to pay $250-300 only for a tour to Thailand, but they spend $500-700 more in Thailand on purchases. Meanwhile, Vietnam’s tourism only gets tour fees, while travelers spend a little money.
Dung argues that airfares should be raised step by step in order to avoid shocks to clients. For example, the return ticket on Hanoi-HCM City should be raised to 2 million dong from the current level of 1.4 million dong, not 2.6-3.4 million dong right away as is now planned.
Dung affirmed that if air carriers agree not to raise fares too sharply, other service providers and hotels will also not raise their rates rapidly.