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Vietnam’s aviation sector to suffer a loss of VND 25,000 billion in 2020

Vietnam’s aviation sector to suffer a loss of VND 25,000 billion in 2020

Friday 28, 02 2020
Vietnam's aviation industry is expected to experience negative growth in 2020 due to the influence of COVID-19.

A series of businesses in the industry has asked for tax and service fees reduction due to the decline in revenue.

Director of the Civil Aviation Authority of Vietnam – Dinh Viet Thang said the Covid-19 epidemic could reduce the revenue of Vietnamese airlines by about VND 25,000 billion in 2020.

Stopping all flights to Korea is a bad scenario

Within days of the outbreak in South Korea, Vietnamese airlines had to cut their flights to this country by 41%. Transport volume has decreased significantly from 26,000 passengers / day to 8,000-12,000 passengers / day (a decrease of 54-70%). Facing serious disease situation, Vietnam Airlines and its affiliates estimated that the revenue in 2020 would drop by VND 12,500 billion, equivalent to a loss of VND 4,300 billion.

The difficulties encountered by Vietnamese carriers also lead to difficulties for related enterprises providing aviation services. Vietnam Air Traffic Management Corporation (VATM) informed that it has faced with carriers delaying paying airline operating costs.

Director of the Civil Aviation Authority of Vietnam - Dinh Viet Thang pointed out two scenarios of aviation market output reduction based on the evolution of Covid-19. In the best scenario when the epidemic is under control before April 2020, the market will reach a total of 67 million visitors, a decrease of 15.4% compared to 2019. In particular, Vietnamese carriers would serve only 12.7 million international visitors (down 28.3%) and 35.3 million domestic visitors (down 5.5%).

Total transport may reach only 48 million passengers (down 9.2%). In a worse case when all the flights to / from Korea must be canceled, and the disease stops in June, the market will only reach 61.2 million passengers, down 22.6% compared to 2019. Specifically, the number of international passengers of Vietnamese airlines will decrease by 41.2%.

Director of the Civil Aviation Authority of Vietnam said that stopping all the flights to Korea is a bad scenario, but it could be worse if the outbreak continues. According to Vietnam Airlines, in addition to losing all Chinese tourists during this period, the number of passengers going to / from Europe, Australia, Japan, Korea, Southeast Asia ... as well as destinations within Vietnam has decreased due to the fear of the Covid-19 epidemic. Currently more and more people have canceled their trips.

Support from the State is really needed

Director of the Civil Aviation Authority Dinh Viet Thang said that several measures are still being applied by airlines to limit damage during this period. Specifically, carriers will expedite the return of leased aircraft, and extend the delivery time of ordered planes. More narrow-body jets are used instead of wide-body ones to accommodate the smaller number of passengers.

In the long run, airlines recommend the Ministry of Transport and the Government to apply a 50% discount for takeoff and flight control services with domestic flights, while exempting or reducing 50% of import tax and environmental protection tax for flight fuels in 3 months (from March to May). This will help airlines reduce the total cost from VND 1,000 to VND 1,900 billion (of which, VND 204 billion is from service discount).

Vietnam’s aviation sector to suffer a loss of VND 25,000 billion in 2020

"Currently, gasoline suppliers have delayed the payment time for companies from 10 to 15 days. The competent units have also reduced service prices, meals, gasoline, etc." said the Director. Mr. Thang said that the reduced flight frequency caused a lot of damage but this is also a golden time for businesses to restructure, repair the runway, and upgrade the station to prepare for recovery. Acknowledging the difficulties that the aviation industry is currently dealing with, Minister of Transport - Nguyen Van The advised that the Civil Aviation Authority should grasp the situation of the epidemic promptly.

"Listening to reports of businesses is not enough. The reports must be verified. Damage data must be obtained daily and weekly to make recommendations," Mr. requested. In addition to the issues that need to be consulted by the Government, the Minister also affirmed a number of possible solutions that the Ministry of Transport could do by itself, such as opening new routes at home and abroad.

"Most of the 48 countries with outbreaks are countries experiencing the cold season when the virus is easily spread. It is possible to open more flights to countries in hot regions, such as India”, suggested Minister The. To overcome difficulties, the Minister of Transport proposed that businesses can give some unnecessary employees an unpaid leave during this time.

​>> 3 scenarios for aviation amidst Covid-19

Source: vnexpress

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Business

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