The End for Cheap Airfare Vietnam

Is it really the end for cheap airfare Vietnam? Because of rising taxes and fuel costs, airlines ramp up prices, the International Air Transport Association (Iata) signalled yesterday.

Cheap airfare Vietnam will no longer avalable?

Leisure air travel fell 3.5 per cent worldwide between November and March as cash-strapped passengers rejected fares that have soared as a result of the increasing cost of oil.

Iata said that airlines had been forced to increase fares because the price of jet fuel had jumped by more than half in the past year. The association raised the prospect of a repeat of 2008 when fuel costs sent ticket prices soaring.

Brian Pearce, Iata's chief economist, said carriers were left with no choice but to ramp up fares. "If they have got a nice fat margin they can lower fares to stimulate demand, but when fuel prices are up by 50 per cent that's not possible," Mr Pearce said. He added that falling economy class sales were "a worrying trend".

Last month, Ryanair, the star financial performer of the budget airlines, said its fares would increase 12 per cent this year to cover an expected rise in its fuel bill, which rose 37 per cent to €1.2bn (£1.1bn) in the last financial year as average oil prices increased from $62 a barrel to $73. The oil price has since stayed steadily above $100 a barrel.

This week, Iata cut its forecast for global airline profit by more than half to $4bn (£2.4bn) because of the sharp hike in oil prices and economic problems which have suppressed activity.

The industry's profit margins will be squeezed to 0.7 per cent this year from 3.2 per cent last year, which was the strongest since the September 2001 attacks on the US.

In conclusion, soaring fuel costs and taxes spell the end for cheap airfare Vietnam in this coming year, 2014.