Aviation and Tourism: Enhancing Tourist Services

Establishing long-term partnerships enables both industries to provide competitive pricing and prevent surges in costs during high-demand periods.

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The aviation and tourism sectors should collaborate in order to lower the prices of hospitality services and attract more visitors, as recommended by an expert from Hanoi.

Do Dinh Cuong, Deputy Head of the Hanoi Tourism Association. Photos: Duy Khanh/The Hanoi Times 

To encourage the provision of reasonable prices to tourists, each sector needs to reduce its profits, said Do Dinh Cuong, Deputy Head of the Hanoi Tourism Association, in an interview with The Hanoi Times.

Cuong argued that instead of spending a large amount of money on solving the problems in the struggling tourism industry, the government should focus on providing better services through collaboration with related sectors.

At present, airfares account for 40%-60% of tour costs, forcing travel agencies to increase domestic tour prices by 10%-20% and negatively impacting market sentiment and Vietnam’s competitiveness in international tourism.

As airfares continue to rise, travelers are choosing to plan their own tours rather than using travel agencies, affecting these companies’ ability to attract visitors despite their well-prepared tourism promotion programs.

Rising airfares also affect the hospitality industry, as visitors opt for affordable lodging facilities to save costs. This airfare hike will have negative effects on tour operators and the overall position of Vietnam’s tourism market during the recovery period.

Visitors at Noi Bai International Airport, Hanoi.

Compared to other means of transportation, air travel is the most popular choice for both visitors to Vietnam and domestic tourists.

Starting from March 1, 2024, the ceiling airfares are expected to increase by VND50,000 ($2) to VND250,000 ($10.2) according to the Ministry of Transport. Do Dinh Cuong stated that if the country faces difficulties this year, this move will significantly impact the tourism sector.

Cuong exemplified the potential for airfare hikes on certain routes. For instance, the Hanoi – Phu Quoc route is estimated to experience an average increase of 70% to VND2.2 million ($89) in 2024, and the Hanoi – Nha Trang route could increase by 55% to VND1.7 million ($69).

As a result, locals may opt for foreign tours instead of domestic ones. For example, a five-day, four-night tour from Ho Chi Minh City to northeastern and northwestern Vietnam costs VND10.5 million ($428) per person, while a six-night, five-day tour on the same route costs VND11-15 million ($448-$612) per person. Meanwhile, promotional prices for a five-night, four-day tour to Thailand are half the cost.

If airfares continue to rise in 2024 due to new regulations, local people may reduce their travel services, which will directly affect tourist destinations but not travel agencies, according to Cuong.

Foreign visitors enjoy Christmas Eve in Hanoi.

Partnership is Essential

Do Dinh Cuong emphasized the importance of collaboration between the aviation industry and tourism, particularly in reducing the prices of services through mutual cooperation between the two sectors.

This entails travel businesses reducing the prices of their services while the aviation industry encourages tour operators to use charter flights with preferential incentives, enabling travel agencies to diversify their product offerings. This model benefits both sectors.

In addition, airlines should consider opening new routes to offer passengers more options and save time and money. At the same time, travel businesses will have new services for these routes, making them strategic partners in the aviation industry.

The aviation and tourism industries should establish long-term partnerships to avoid price hikes during peak seasons. To implement this idea, the government should act as a coordinator to ensure that prices do not fall below a certain level.

Cuong suggested that the Government of Vietnam should extend the application of the 8% value-added tax (VAT), which was reduced from 10%, until the end of 2024. This would support local businesses and expand the range of products and services eligible for the tax reduction to stimulate production, contributing to the growth of the aviation and tourism sectors.

Cha ca or fried fish, a specialty of Hanoi. Photo: Ho Ha/The Hanoi Times

Tourism Achievements in 2023:

In 2023, Vietnam’s tourism industry experienced a recovery, welcoming 12.6 million international visitors, which was 3.4 times higher than in 2022 and exceeded the target of eight million. Of these visitors, 11 million or 86% arrived by air.

Domestic tourism also showed a 5.8% increase, with 108 million tourists. Of this total, 68% traveled by air.

The aviation industry played a significant role in these achievements, maintaining the domestic flight network and opening 66 more domestic routes that connected tourist destinations, including Hanoi, Ho Chi Minh City, and Danang. It also connected 19 airports across the country, operating more than 600 flights per day.

In 2023, new air routes were launched, such as Cantho – Van Don, Hanoi – Ca Mau, and Ho Chi Minh City – Dien Bien. Traditional international air routes that connect China and Russia were also resumed, and new routes to Central Asian destinations like Kazakhstan, Uzbekistan, Turkmenistan, and Mongolia were launched. Additionally, more routes and flight frequencies were introduced to India and Australia.

These changes in tourism source markets contributed to a positive impact on attracting tourists, as emphasized by Cuong.

Foreign visitors in Hang Ma, Hanoi, ahead of the Lunar New Year 2024 or Tet holiday.