Secret behind cheap air tickets from budget airlines

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No free meals, no recreational facilities, not even a magazine ... is the way low-cost carriers make, in order to maintain their ticketing policy.

By the time of 2012, very few flights in Vietnam are priced at less than VND100,000, with the exception of a few free tickets sold by Vietnam Airlines on the occasion of the new year.

For most Vietnamese at that time, flying experience on the clouds, crossing 2,000 km connecting the two ends of the country in just two hours was a dream. Particularly, the "sky" fare has been a good reason to keep up with their choice of popular means of transport such as cars, trains ...

But, things have been different since the last five years, when the fares of all domestic airlines for many times dropped to seven digits. A range of nominal rates are also offered by airlines, from VND10,000, VND3,000, VND1, VND0 for domestic flights, and $ 10 for international flights.

The elements form a cheap flight ticket

According to Zing.vn , a spokesperson for a law firm, airlines are usually required to register a range that is allowed to be sold, but within which range the balance is charged. .

"For example, a carrier with 12 rates between VND 100,000 and VND 3 million, the airline is only allowed to set the price in that range. floor price, "he said.

Leaving the floor price floor has created a large enough space for young, cheap, cheap-oriented airlines in Vietnam. From the formula of a proven and recognized business model from the United States, to Europe and Asia, the Vietnamese market has also emerged as a business model, and is gaining market share. Equivalent to the "giant" Vietnam Airlines. The only essence of all is to minimize costs, by all means possible.

In 2012, customers who fly Vietnam Airlines aircraft for the first time to go to Jetstar or Vietjet Air can suddenly see, when no longer served free meals. In fact, the cheap flight model requires the removal of meals out of fare, but is ready to serve them on board for those in need. And of course, customers have to pay for this service.

No free meals, no entertainment, no even a magazine - that's the most noticeable difference between the two cheap and traditional models.

"The cost of putting a magazine on board is extremely expensive, including the purchase or ordering of the publication, labor costs, fuel costs, and time for stewardesses to order. That's right in the cabin, while low-cost carriers want to survive the maximum savings, "said one airline expert.

Low cost airlines in Vietnam usually choose to fly in less than 4 hours, to ensure that a crew can make both the return flight and the return flight. Round-trip flight time is limited to 10 hours, so there is no additional cost for crew support.

Online ticketing is a way companies encourage customers to use, by placing more promotions dedicated to this group. There is no need to pay staff, no additional room for ticket costs, no hard ticket printing, ticket codes and flight details that the customer can print on their own.

Preventing the risk of fuel costs is also a critical issue for low-cost airlines. Fuel costs typically account for between 30% and 60% of total operating costs. Therefore, the more active the source of cheap gasoline, the more companies have the opportunity to reduce ticket prices to compete.

However, choosing the right time to buy cheap gasoline is not easy. Jetstar has suffered losses of up to $ 31 million in the purchase of gas reserves around 2008, due to objective risks in the context of world economic turbulence.

How long does a "cheap lunch" last?

On the social network over the past several days, a status line of Mr. Nguyen Thanh Nam, former CEO of FPT, has attracted the attention and sharing of many people, as he spoke about the difference between Traditional and cheap.

He expressed, in every flight of a cheap airline, he met many of the old guy's sketches, boys ... According to his description, the face of these people "as long as strenuous, but their eyes light up joy. " Thanks to this cheap airline, they can fly. Thanks to this company, they have access to the most advanced services, seen fragrant toilets, learned to queue up on the plane and turn off the phone in public.

In a way, he says, cheap air travel is "learning a new way of life for millions of Vietnamese civilians." Unlike Vietnam Airlines, its positioning is reserved only for successful businesspeople or ladies. elegant".

Cheap, even nominal, airfare has helped the market for four domestic airlines expand, growing at nearly 14% in 2011-2015. The slice of bread for the big guys seems to be getting smaller, but on the other hand, with the growing number of guests, all of them are benefiting from the competition.

Nevertheless, the reality is that very few flights are filled up, even at cheap rates. The average seat occupancy of airlines in Vietnam as of October 2015 is only 83-88%, which means that there is always at least 5% of seats on empty flights (rates at departures The beginning of Tet holidays will be much higher. To maximize efficiency, the company always places a certain amount of promotional credits.

However, airlines now have a choice rather than a nominal ticket on all flights. It is over-ticketing policy. 5% of seats on the plane will be sold too, to ensure when the plane takes off, the seat is almost zero.

Offering aggressive promotions and shocking rates, low-cost airlines often give reasons for creating travel habits for customers. However, in the foreseeable future, the frequency with which tickets for shock, super cheap prices appear on the market is expected to fall sharply. Especially, when the low-cost carriers occupy the largest market share in Vietjet Air, the expiration of the investment incentive period expires. The tax rate will then be equivalent to the VNA, instead of the current 50%.