The Civil Aviation Authority of Vietnam on March 10 said it had proposed the measures to support airlines amid a sharp rise in aviation fuel prices.
The agency asked the Ministry of Construction to report to the government on revising preferential import tax policies for certain petroleum products and input materials.
It also proposed that the National Assembly Standing Committee waive 100 per cent of environmental protection tax on aviation fuel until the end of May 2026. In addition, aviation fuel could be added to the list of goods eligible for value-added tax reductions, cutting VAT from 10 per cent to a lower rate.
The authority also suggested allowing airlines to impose a fuel surcharge on domestic air tickets, with a flexible mechanism linked to fluctuations in Jet A-1 fuel prices. It recommended that ministries review domestic airfare caps if necessary so airlines can maintain operations.
Since late February, military conflict in the Middle East has pushed aviation fuel prices sharply higher. Jet A-1 fuel in Singapore has climbed from around USD 83-89 per barrel in February to roughly USD 160 per barrel and is expected to remain elevated.
According to the International Air Transport Association, operating costs for airlines can rise by 50-60 per cent when Jet A-1 prices surge. If fuel prices exceed USD 200 per barrel, total operating costs could increase by more than 70 per cent.
Tight crude oil supply has also forced several Asian refineries, key suppliers to Vietnam, to reduce output and limit exports to meet domestic demand.
Vietnam relies heavily on imported aviation fuel, with around 70 per cent of demand sourced overseas and more than 60 per cent supplied by Thailand and China.
The aviation authority warned that shortages of jet fuel for domestic airlines could emerge from early April and persist in the following months, potentially affecting flight operations during the peak holiday period around April 30-May 1 and the summer tourism season.
Airlines have reported significant cost pressures as fuel prices climb. The national carrier Vietnam Airlines said its monthly operating costs could rise by 50-60 per cent if Jet A-1 prices remain around USD 200-230 per barrel.
Meanwhile, Sun PhuQuoc Airways estimated its costs could increase by about 30 per cent, while VietJet Air said expenses could rise by roughly VND 2 trillion (about USD 80 million) per month at current operating levels.
Airlines are reviewing flight schedules from April in an effort to reduce fuel consumption and minimise the risk of disruptions.
The aviation authority has urged carriers to prepare appropriate business plans, optimise costs and adjust domestic route networks to match market demand while reducing financial risks.