Vietnam’s airlines apply for tax break

State media reported that the national flag carrier Vietnam Airlines and Jetstar Pacific have both asked the Ministry of Finance for tax breaks on aviation fuel during economic difficulties. Vietnam Airlines proposed a waiver of the import tariff on aviation gasoline (avgas) if Platts Singapore jet kerosene rises above US$118 per barrel. The company said that revenues shrank in the first four months of the year due to the global economic slowdown, while the cost of fuel simultaneously rose by VND303 billion (US$14.3 million).
Vietnam Airlines explained that a US$1 per barrel increase in fuel prices could raise the carrier’s fuel costs by nearly VND150 billion (US$7.1 million). This would result in enormous losses as fuel cost makes up 40%-45% of the airline’s total expenses. Jetstar Pacific, on the other hand, requested the ministry to exempt it from import duty if the price of JetA1 rises above US$100 per barrel in the world market; the current import duty is 7%.
The company also proposed that local airlines be exempted from the environment tax. In response to these proposals, the Finance Ministry said that it will issue a circular on specific tax concessions for aviation gasoline. (August 9, 2012)