Pham Ngoc Minh, general director of Vietnam Airlines, said airlines had to pay 70 per cent of their costs, including for fuel, aircraft leasing, and pilots' salaries, in foreign currency, and these have now risen sharply.
As a result of not being allowed to increase fares or collect fares for domestic flights in foreign currencies, carriers have been forced to pick up the extra tab.
Minh said Vietnam Airlines incurred a loss of US$30 million on domestic flights last year.
For Jestar Pacific, fuel expenses account for 45 per cent of revenue from airfares.
Other expenses had also risen due to high inflation, he said.
The carrier's fares now stand at US$35 per flying hour per passenger compared with some $60 in Thailand and $75 in Malaysia.
It wanted a fare hike of 25 per cent to avoid losses, Thanh added.
Doan Quoc Viet, chairman of Mekong Air, said fuel costs accounted for 50 - 60 per cent of revenue from airfares while the exchange rate adjustment had increased expenses by 13 - 14 per cent. Mekong Air had sought a fare increase of 20 to 50 per cent so that it could earn 2 to 3 per cent profits to remain operational, he added.
CAAV deputy general director Luu Thanh Binh said the carriers' demands were "reasonable" since current fares were likely to cause losses.
But in the current situation, with the country already grappling with inflation, a 20 per cent increase in air fares would be more reasonable, he added.
Tran Ngoc Thanh, head of the Ministry of Transport's Transportation Department, said the hike must be approved by Prime Minister Nguyen Tan Dung.
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