Railway sector may take four years to recover: VNR Chairman hinh anh 1The railway sector has taken a blow from COVID-19 (Photo: VietnamPlus)


Hanoi (VNA) – The railway sector has taken twin blows from the COVID-19 pandemic and the repairs of the Hanoi-HCM City railway.

Under the impact of the pandemic, the Vietnam Railway Corporation (VNR) has worked to select suitable passengers and services, increase cargo transport and even put a whole train for rent in a bid to maintain its earnings.

However, the complicated development of COVID-19 has forced the sector to adjust its scenarios many times. It is certain that the sector will be hurt by both the pandemic and the reparation of the Hanoi-HCM City railway line.

Offering new services to offset losses

As the railway sector could not win against aviation, VNR Chairman Vu Anh Minh said the competition between modes of transportation has become fiercer, especially when the aviation sector increase their promotions and flight frequency. At the same time, railway infrastructure has downgraded, resulting in the further decline of passengers.

Compared to other types of transport, VNR still has the upper hand in short - medium routes which have few flights such as Hanoi-Quang Binh, Hanoi-Lao Cai and HCM City-Nha Trang. The sector has chosen suitable departure time, trains and services meeting demand of domestic passengers.

Accordingly, the sector has put the trains for rent, offer ticket discounts of up to 50 percent, and organise events aboard. With that move, it can identify future earnings upon signing rental agreements, without being concerned about empty seats.

The new services are hoped to lure passengers back, he added.

VNR is also planning to reduce the number of long passenger trips due to inefficiency and focus on long cargo trips carrying large amounts of materials such as cement, petrol and oil, iron ore and coal as well as freight to China, along with seeking new customers.

Suffering from dual losses

As the COVID-19 pandemic is brought under control at the moment, the railway sector faces another problem with a project worth 7 trillion VND (301.88 million USD) to repair the Hanoi-HCM City line.

According to VNR estimates, the implementation of the project will reduce its capacity by 30 percent compared to the usual.

The corporation will join hands with investor to carry out the project in the swiftest manner as infrastructure is the core of its business operation. Initially, the project is scheduled to complete at the end of June 2021. The deadline, however, will surely be missed.

About 1 trillion VND in revenue will be lost if it lasts for other six months, and 2 trillion VND for a year, the VNR Chairman noted.

Railway sector may take four years to recover: VNR Chairman hinh anh 2Railway workers repair the track (Photo: VNA)

Minh added that it is necessary to set the finish date of the project because its completion will help raise the capacity by about 30 percent and reduce waiting time.

[Vietnam Railways estimates 60 million USD loss due to COVID-19]

On the other hand, improved infrastructure will ease uncomfortable travel experience for passengers.

Only once the project is completed, the sector will be able to attract customers and enhance its capacity, thereby generating profits. It may take three or four years for the sector to fully recover.

The slow recovery of firms will directly link to State budget collection, therefore, support policies and aid in the post pandemic period are needed, Minh suggested.

VNR has proposed the Government reduce transport infrastructure use fees and exempt the corporation from paying 20 percent of railway infrastructure rent revenue in 2020.

It has also asked for a three-year extension for the replacement of old engines and carriages.

Last year, the corporation posted a consolidated revenue of more than 8.3 trillion VND and pre-tax profit of 180 billion VND./.