Vietnam airfares to Singapore, Thailand plummet as capacity surges

Overview

Vietnamese airlines have sharply increased international capacity, triggering a price war that has cut airfares to Singapore and Thailand by as much as 50% year-on-year. The fare drop, combined with lower fuel costs from government tax cuts, is reshaping the competitive landscape for flag carrier Vietnam Airlines (HVN) and budget leader Vietjet Air (VJC).

Key Facts

• A one-way HCMC-Singapore ticket fell from VND 3.2 million (US$122) last year to just over VND 1.6 million this year.
• HCMC-Bangkok fares now start at VND 1.9 million, while some foreign airlines still charge two to three times that amount.
• HCMC-Jakarta fares dropped from VND 7-10 million to VND 6.3 million.
• Fares from Hanoi and HCMC to Europe and Northeast Asia have fallen 10-15% from last year.
• Vietnam’s available seats in August are projected at 7.3 million, up 10% year-on-year, second in Southeast Asia only to Indonesia (OAG data).
• Vietnam Airlines accounts for 2.8 million seats; Vietjet Air for 2.2 million.
• Vietjet increased HCMC-Kuala Lumpur frequency to seven flights weekly and will launch HCMC-Colombo (Aug 18), Hanoi-Almaty and Hanoi-Prague (October).
• On July 1, the government cut preferential import tariffs, environmental protection taxes, and VAT on gasoline and aviation fuel until September 30.

What Happened

Hoang Loan, a HCMC resident, was surprised to find a business-class fare to Singapore at just over VND 1.6 million, the lowest she had seen since the pandemic. The fare drop is attributed to a rapid capacity expansion by Vietnamese carriers, which has intensified competition on regional routes.

According to OAG, Vietnam will have 7.3 million available seats in August, a 10% increase from last year. Vietnam Airlines and Vietjet Air are the main contributors, with 2.8 million and 2.2 million seats respectively. Vietjet has also boosted frequencies on existing routes and is adding new destinations, including Colombo, Almaty, and Prague.

Hong Thanh, a ticket agency owner in HCMC, said increased supply and muted overseas travel demand are key reasons for the fare decline. Additionally, government tax cuts on fuel, effective July 1 through September 30, have reduced operating costs for airlines.

Market Context

Vietnam Airlines (HVN) closed at VND 23,800 on August 10, 2026, while Vietjet (VJC) closed at VND 125,500. Both stocks trade on the HOSE. The aviation sector is facing margin pressure as yields decline, but lower fuel costs provide some offset. The capacity expansion aligns with Vietnam’s post-pandemic recovery, though demand has not kept pace, leading to a buyer’s market for international travel.

Strategic Significance

For long-term investors, the fare war signals a shift toward volume-driven growth in Vietnam’s aviation market. Vietnam Airlines, as the flag carrier, is leveraging its network to maintain market share, while Vietjet is aggressively expanding its international footprint. The government’s fuel tax relief, though temporary, offers a cushion against rising input costs. The key strategic question is whether airlines can sustain profitability as yields compress, or if consolidation will follow.

What to Watch

• Q3 2026 earnings reports from HVN and VJC, due in October, to assess margin impact.
• Fuel price trends and any extension of the tax cut beyond September 30.
• Passenger load factors on new routes (HCMC-Colombo, Hanoi-Almaty, Hanoi-Prague) in the first months of operation.
• Competitive responses from foreign carriers on key routes like HCMC-Singapore and HCMC-Bangkok.
• Government policy on aviation capacity and route licensing in the second half of 2026.