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3 scenarios for aviation amidst Covid-19

3 scenarios for aviation amidst Covid-19

Wednesday 26, 02 2020
The Vietnam Aviation Department has announced 3 scenarios for the aviation market in 2020, with the most optimistic case being the end of the epidemic in April

The moderate case being the end of the epidemic in June, and the worst case being the end of the epidemic in August.

The current situation

According to the Vietnam Aviation Department (Ministry of Transportation), by February 2020, the whole nation has had 235 aircraft registered under the Vietnamese nationality, increasing by 3 compared to the figure in January and by 48 over the same period last year.

In which, Vietnam Airlines owns 106 aircraft, Vietjet owns 75 aircraft, Bamboo Airways owns 22 aircraft, and Jetstar Pacific owns 18 aircraft. The rest are aircraft owned by Airlines Services Aviation Company, Hai Au Aviation JSC, Green Planet Technology Co., Ltd, Viet Star Dual-use Aviation JSC, and Vietjet Air Technical Services JSC.

The current number of helicopters with Vietnamese nationality is 32, increasing by 3 over the same period last year. Despite the sharp increase in the number of aircraft, the number of aviation customers, especially foreign ones, as well as the number of airport transportation, has decreased.

This is a significant decrease after consecutive years of increase in the Vietnam aviation market. Specifically, the number of customers via airports in February 2020 has reached nearly 8.1 million, decreasing by 11.6% over the same period in 2019. In this amount of customers, foreign ones account for 2.4 million and domestic ones account for 5.7 million, decreasing by 29.% and 0.7%, respectively. Also in February, Vietnam airlines have transported 3.7 million customers, which is a decrease of 13.7% over the same period last year.

The number of foreign customers has dropped by 39.5% to only 870,000, while the number of domestic ones has decreased slightly by 0.7% to 2.8 million. The International Air Transport Association estimates that the Covid-19 epidemic will create a loss of 29 billion USD for airlines, with the most severely-damaged ones operating in the Asia-Pacific market.

Specifically, Chinese airlines are likely to suffer a loss of 12.8 billion USD. Dr. Can Van Luc and the group of authors at the BIDV Training and Research Institute said that the aviation industry (with a revenue of approximately 200 thousand billion VND, directly contributing 0.1% to the national GDP) would be the one suffering most directly and severely from the negative impacts of coronavirus.

It is estimated that the revenue and profit of this industry would drop sharply in the first and second quarters, or even in the whole year of 2020. This is still dependent on the development of the epidemic.

3 scenarios for aviation amidst Covid-19

The 3 scenarios

The most optimistic one

Facing the aforementioned situation, the Vietnam Aviation Department has proposed 3 scenarios for the air transport market in 2020. According, if the epidemic ends in April (which is the most optimistic one), the total number of 2020 will still reach 80 million, increasing by 1.1%. The number of customers passing airports will reach 119 million.

The moderate one

In the moderate scenario (in which the epidemic ends in June), the entire market will reach only 74.6 million customers, decreasing by 5.7%, with the number of customers passing airports reaching 111.6 million, decreasing by 4.2%.

The worst one

In the worst-case scenario with the epidemic ending in August, the number of customers of the entire market will drop sharply by 17.2% to only 65.5 million, and the number of customers passing airports will decrease by 15.5% to 98.5 million. According to the leaders of Vietnam Airlines, each week of the epidemic makes Vietnam Airlines lose around 200-250 billion VND. Each week, Vietnam Airlines has to cancel around 300 flights to China. The revenue of this brand has dropped significantly by 20-25% in the first half of February in both the customers and the goods transportation sector. Currently, tens of aircraft of domestic airlines still remain inactive.

​>> Aviation stocks as soon as the Corona epidemic is successfully controlled

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