Not all flight cancellations come from low customer demands, sometimes airlines are literally running out of fuel. That’s exactly what’s happening in the Vietnam aviation market.
Instead of adding new routes, or expanding to additional cities and states, we are seeing airlines literally cutting flights to maintain stability.
Vietnam Air is going to cut approximately 23 domestic scheduled flights per week, not because demand has fallen off a cliff; they are cutting flights because of a problem with Jet A-1 fuel availability, otherwise known as avtur.
Since the unrest in the Middle East began heating up about three weeks ago, we have seen fuel prices gradually rising. Vietnamese aviation officials state, that due to the escalating price of oil, the domestic fuel supply chain to the airlines is being impacted, thus forcing them to evaluate their schedules.
This will make domestic air travel less reliable starting April 1, 2023.
Airlines will continue to provide service for major domestic routes, as well as international routes; thus showing that airlines are trying to protect their most critical and essential travel connections while sacrificing, less important or less frequently used routes.
Fuel is a very tightly planned item for the airlines; they need the supply chain to work smoothly and for the price to be as predictable as possible in order to operate their flights in a timely manner. When fuel becomes uncertain, airlines will pause operations even on profitable flights because the operational risk is too high.
From April 1, all Vietnamese airlines will impose additional fuel surcharges on international flights. Passengers flying on international airlines will see their ticket prices increase as they continue to fly as previously scheduled.
This is a common practice for airlines during times of high fuel costs; they pass some of those costs along to customers.
For its part, Vietnam has begun securing international fuel supplies in Qatar, Kuwait, Algeria, and Japan, and is also working with Russia to produce oil and gas.
In addition, Myanmar National Airlines has canceled a number of domestic flights with little detail provided. Meanwhile across the globe, United Airlines has also decreased available flight capacity due to the increasing price of jet fuel.
Thus, the impact of rising fuel prices is becoming more widespread, and is becoming an issue affecting global aviation, rather than just regional aviation.
Airlines generally respond to increases in fuel prices by reducing the number of flights provided; increasing the price of their tickets; or economically optimizing the routes they offer. In current, active aviation markets such as Vietnam, airlines are executing all three of these actions simultaneously by providing fewer flights, starting to plan fuel surcharges, and attempting to protect key routes.
So if you see a reduction in the number of domestic flights offered in Vietnam beginning April 1st, it will not be due to a reduction in travelers.
But on the contrary, it will be due to fuel being able to exert more influence over air travel now than ever before.
