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Vietnam’s aviation market: Prospects for 2022

Vietnam’s aviation market: Prospects for 2022

Wednesday 13, 04 2022
Strong recovery signals came to Vietnam’s aviation market as revenue and profit growth in the last quarter of 2021 helped to shoulder the losses in the first quarters of the year. However, there remain uncertainties that may affect the industry’s recovery in 2022.

Vietnam’s aviation market in 2021

Vietnam’s aviation market in 2021 shows a clear improvement, proven by a series of published business results reports for the fourth quarter and the whole year of 2021.

Vietnam Airlines

In the fourth quarter of 2021, Vietnam Airlines recorded a revenue of more than 9,200 billion VND, an increase of more than 1,000 billion VND compared to the same period in 2020, bringing the accumulated revenue of the whole year to 28,093 billion VND. The parent company's after-tax profit in the fourth quarter of 2021 had a loss of 1,432.5 billion VND, a loss of 44.7% compared to the fourth quarter of 2020.

Explaining the fluctuations in profit after tax in the fourth quarter of 2021, a representative of Vietnam Airlines said that the easing of regulations on entry and medical isolation created conditions for airlines to return to regular routes, significantly improving cash flow and profitability.

However, with the whole country closed off to fight the pandemic in the first quarter of 2021, the national airline still reported a record loss of more than 13,337 billion VND, a heavier loss than in 2020.

As for Bamboo Airways, according to FLC's consolidated financial statements, by the end of 2021, Bamboo Airways suffered a loss of about 2,300 billion VND. As a member of the FLC Group ecosystem, Bamboo Airways is also going through a difficult period due to aftershocks after their former Chairman Trinh Van Quyet was involved in legal trouble.

As for VietJet Air, in the fourth quarter of 2021, this low-cost airline recorded consolidated revenue of 2,789 billion VND and a corresponding decrease of more than 37% over the same period.

VietJet Air

In 2021, consolidated revenue reached 12,998 billion VND, down 29% compared to 2020. However, thanks to a financial revenue of 3,920 billion VND, four times higher than the same period, Vietjetair still has a net profit of 100 billion VND, a sharp increase of 46% compared to 2020.

Rapid recovery in 2022

According to the International Air Transport Association (IATA) forecast, the total number of world travelers will reach 4 billion by 2024, exceeding pre-COVID-19 levels.

Accordingly, from 47% of passengers in 2019 in 2021, it will improve to 83% in 2022, 94% in 2023, 103% in 2024 and 111% in 2025.

More optimistically, the recovery plan for the Vietnamese market is forecasted to be faster than the world average. The number of domestic tourists is predicted to return to the pre-pandemic level in 2022, equaling 111.2% compared to the 2019 level. The number of international visitors recovers slower and will return to pre-pandemic levels in 2024.

Positive signals come from the Government's decision to reopen international commercial routes from February 15 to restore trade and reopen tourism from March 15, with conditions being eased to the maximum, contributing to an increase of 6.9% over the same period, bringing the number of flights operated from February 19 to March 18 to 18,223.

international commercial

In 2022, VietJet Air will continue to implement the digital transformation project to meet the increasingly diverse needs of customers. The airline will promote the development of new business segments, including freight services and ground services.

Vietnam Airlines pioneered stimulus programs and opened new flight routes. From March 27, Vietnam Airlines operated 55 routes, 16 more routes compared to 2019.

However, although air transport is well resistant to shocks and the Ukraine-Russia conflict is unlikely to affect the long-term growth of air transport, experts all express concern when there are associated risks, especially in potentially conflicting markets. Before Covid-19, Russia was the 11th largest air transport market in terms of passenger numbers, while Ukraine ranked 48th.

In addition, the price of jet fuel increased to a multi-year record high. Brent crude oil price hit a nearly 14-year high of about 140 USD a barrel after the US and UK announced a ban on Russian oil exports. These two factors are also a hindrance to the aviation industry's recovery.

 

Source: vneconomy

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