High fee burdens flights to Da Nang Vietnam
31/07/07 (GMT+7)
Flights to Da Nang, last year, Da Nang authorities successfully persuaded the budget Tiger Airways to open a Singapore-Da Nang air route. However, the route was closed just after several months of operating.
In fact, many air carriers have eyed Da Nang, a land with big tourism potential, and tried to provide flights to Da Nang. Pacific Airlines had the Da Nang-Kao Hsiung route, Thai Airways provided Da Nang-Bangkok flights, while Far East Airways provided direct flights on the Da Nang-Taiwan route.
However, the flights on the routes could not exist for more than two years. There are many reasons behind this, but the biggest problem is the overly high land service fee.
Overly high fee making airlines cry
Pacific Airlines proves to be the airline that maintained international flights to Da Nang Vietnam for the longest time. The airline tried to maintain its flights to Da Nang despite losses since it had to pay VND5.5mil for a land service fee every flight, an overly high level. But it had no other choice because there is only one land service provider in Da Nang, DIAGS, which belongs to Vietnam Airlines. Pacific Airlines tried to save itself by doing several works itself, like handling luggage, beginning in June 2006.
According to leaders of Pacific Airlines’ Finance Division in Da Nang, the air carrier could save up to 50% of total expenses since it did not use several of DIAGS’ services. However, Pacific Airlines still had to pay VND3.9mil per flight for the other services it did not have the right to do.
Currently, two air carriers are trying to maintain international flights to Da Nang, namely PB Air and Silk Air. The airlines have asked for a fee reduction, as the air routes will only bring profit after three years of operation.
The airlines only use small aircrafts for the flights to Da Nang (70-80 seats), but only half of the seats are occupied for every flight. The overly high land service fee of $450-700 for every flight makes the flights unprofitable.
The current land service fee that airlines have to pay for the flights to Da Nang is equal to that offered by Noi Bai and Tan Son Nhat airports. This proves to be unreasonable, because the two airports are modern international airports, while the flights to the two airports are always full of passengers.
Meanwhile, Da Nang airport has not developed well. The terminal has not been enlarged and has many items downgraded. The check-in area cannot be expanded due to limited space, while the waiting room for departure is just large enough to have 400 seats.
Monopoly is the culprit
Airlines have many times asked it to lower the land service fee in order to develop flights more effectively. Leaders of the tourism administration also think that lowering the fee would help make travel expenses cheaper, thus encouraging tourism industry and attracting investment.
A vicious circle exists: the overly high fee leads to few air routes and few passengers, while the lack of passengers certainly leads to the high fee per capita and losses for air carriers. This explains why Japanese, South Korean and Australian airlines, which once worked with local authorities on opening new air routes, shrink from difficulties.
Meanwhile, DIAGS Director Tran Thanh Son said that air carriers did not want to develop the air routes to Da Nang not because of the high fee. In fact, the air carriers can enjoy the fee reduction of 50% and the air routes are not effective because there are not many passengers.
However, airlines do not accept Mr Son’s explanation, saying that the land service fees in other airports of the central region’s airport complex, like Phu Bai, Cam Ranh, Phu Cat, Chu Lai, and Pleiku, are much lower than the levels offered by DIAGS.
Tan Son Nhat Airport has two land service providers, namely DIAGS and one belonging to the Southern Airport Complex, while Da Nang airport has only one service provider, DIAGS, and the monopoly, according to airlines, is the main reason behind the overly high service fee.
(Source: Tuoi tre)
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