The Vietnam Aviation Industry battle with the Covid-19 pandemic

The latest figure suggests the pandemic hit the sector hard and the Vietnamese government needs to step in to help the aviation sector
The Vietnam Aviation Industry battle with the Covid-19 pandemic
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The COVID-19 pandemic has pushed the international aviation sector towards the worst crisis and it affected passenger traffic, air cargo demand, airport workforce and revenues severely.

Vietnam is no exception. The COVID-19 pandemic has had a great impact on the aviation industry. When Vietnam recorded no community transmission for more than 100 days and fully contained the pandemic, there were high hopes that easing travel restrictions could help to save the country’s aviation industry this summer. However, the pandemic had a great and severe impact on airline companies.

Vietnam Airlines, the largest airline carrier, has reported  a total loss of more than Vietnam Dong (VND) 6.64 trillion ($284.26 million) in the first six months of 2020. Suspending all international flights and limiting domestic services in early April were the reasons for their losses. The airline decided not to pay dividends to its shareholders for the year 2019.

Budget airlines also faced a difficult summer due to the COVID-19 pandemic. Vietjet Airlines has reported its revenues of VND1.97 trillion ($84.4 million), a decline of 54 per cent from the previous quarter. Despite Vietjet having successfully resumed domestic flights, the budget airline reported losses of VND1.1 trillion ($47.1 million) in the second quarter. The low-cost airline recorded revenues of VND1.97 trillion ($84.4 million) in airway transportation, a decline of 54 per cent from the previous quarter.

Their rivals such as Bamboo Airways, Jetstar Pacific Airline, have all reported substantial losses to hundreds of million Vietnam Dong. Bamboo Airways is controlled by FLC group and the airline could not avoid the same fate and reported a loss of VDN1.17 trillion. Similarly, Jetstar Pacific Airline also suffered from heavy losses and hardly operated any airway routes from 19 March to April and in 30 days, the airline cancelled their flights to affected countries and operated only 79 flights which was the lowest operations of Jetstar Pacific Airline in the history.

Behind the grim pictures of the airlines, the COVID-19 pandemic also affected auxiliary services providers. Because domestic and international travel fell sharply, all flights were cancelled and halted. International visitors play an important role to help the industry moving due to the large amount of money they spend in Vietnam. These factors had a great impact on the airline auxiliary service providers.

Tan Son Nhat Aviation Services Joint Stock Company (Sasco), which operates a chain of duty-free goods and supporting services at airports, has been closed since the coronavirus outbreak. Similarly, Taseco Aviation Services Joint Stock Company (Taseco Airs), specializing in providing aviation services, meals at major airports such as Noi Bai, Tan Son Nhat, Da Nang, Phu Quoc, reported its revenue decreased more than 21 per cent.

It is clear that the COVID-19 pandemic had a great impact on the Vietnam aviation industry. It is forecast that the aviation industry will suffer more after reporting a dozen new COVBID-19 cases and 17 deaths.

As the pandemic is still unforeseeable and complicated in other countries, all international flights are halted and domestic flights operate in moderation. There is no hope for the aviation industry to recover unless the Vietnamese government step in to support the struggling airlines.

It is necessary for the government to consider and approve supporting packages including unlimited exemptions from taxes and aviation service fees to ease the burden of operating fees. It is the time for the Vietnamese government plays an important role in helping the country’s aviation industry and implement new supportive measures, for example, to exempt environmental tax and give a financial support package. These supports are necessary in the current climate even though this will be costly but it is essential for airlines to strengthen and consolidate their domestic flights and keep them afloat.

Other governments have held talks and intervened to bail out their aviation industries around the world. It is urgent now for the Vietnamese government to help the aviation industry to recover because this is one of the backbone industries that promote Vietnam’s economic growth. They also need to act with urgency to protect jobs in the aviation sector, many of which are highly-skilled and recognise the immense crisis facing the country’s airport communities and take action to support Vietnam aviation and protect livelihoods.

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