Vietnamese airlines facing vital challenges

Vietnamese airlines are facing vital challenges in their production and business activities. (Photo: VietnamPlus)

Hanoi (VNA) - To revive carriers in this period, State agency representatives said that the Government's support is very important to help the airlines have capital to restore services.

Air transport is encountering a worse situation than the predicted scenarios because of the COVID-19 pandemic and Vietnamese airlines need timely support from the Government and businesses in the industry to revive the domestic and international markets.

When will the aviation sector fully recover?

According to Dinh Viet Thang, Director of the Civil Aviation Authority of Vietnam (CAAV), the COVID-19 epidemic has greatly affected the economy of all countries around the world, especially the aviation industry. According to the International Air Transport Association (IATA), the global aviation damage has reached 200 billion USD.

Thang also admitted that Vietnamese airlines have also been hard hit as only 1-2 percent of the existing 250-aircraft fleet are operated during the COVID-19 outbreak. Currently, the Vietnamese air transport market has been partially restored and about 70-80 percent of the planes are still lying ground.

He added that the CAAV forecast the domestic aviation market will fully recover by mid-2021.

“The international aviation market is relatively unpredictable because the COVID-19 pandemic is developing very complicatedly in countries around the world and the resumption of international flights is highly dependent on travel demand. It is forecast that by the end of 2021 at the latest, the international aviation market will return to the 2019 level,” Thang said.

Emphasizing that the impact of the COVID-19 is "unprecedented in the history of the aviation industry," Duong Tri Thanh, General Director of Vietnam Airlines, said the pandemic has pulled the aviation market back to 3-4 years ago and made his airline’s financial accumulation in 4-5 years zero.

With the current disease developments, the Vietnam Airlines leader expects that in 2020, the airline’s capacity will reach about 60 percent and its revenue will drop 50 trillion VND, 65 percent lower than the plan.

"Like other carriers, Vietnam Airlines is facing vital challenges in its production and business activities. The rest of 2020 and the following year will be the period for the carrier to overcome difficulties and recover, during which it must change itself to survive a pandemic," said Thanh.

He revealed that Vietnam Airlines has been and will be applying many powerful breakthrough solutions such as labour restructuring and staff downsizing; reorganization of apparatus and production lines; income adjustment; cutting all expenses that are not really urgent; delaying possible spending; negotiating to reduce prices for signed contracts.

Vietnam Airlines has proposed a support of about 12 trillion VND from a credit support package of 250 trillion VND (minimum loan term of 3 years with interest rate of zero percent) to maintain operations and ensure liquidity.

Post-pandemic support is important

The most difficulty of airlines currently is cash flow as flight suspension means no revenue, according to Thang.

“The obvious damage to the airlines is that without revenue during the outbreak, they still have to pay aircraft, staff and other management costs,” he said.

To revive airlines at this time, he noted the government's support is very important in order to create conditions for them to have capital to restore services.

"The government's support is just to encourage airlines to maintain operations, the most important thing is the efforts of the airlines themselves," said the head of the CAAV.

The Civil Aviation Authority of Vietnam forecasts the aviation industry will fully recover by the end of 2021. (Photo: VietnamPlus).

Regarding the Ministry of Finance’s recent issuance of a Circular featuring reductions in some fees and charges in the aviation sector by the end of this year, Thang said that this is a boost for airlines so that they are determined to overcome this difficulty.

 “Support during the outbreak is important, but the most important of all, assistance after the pandemic. Tax and fee reductions are just a boost, the important here is long-term support such as setting up routes, flight operations and especially providing loans for the airlines to restore production and business,” he said.

Thang said his agency will provide maximum support and the best conditions for the airlines to restore the domestic market and work with banks to give them preferential loan packages.

Regarding air transport, at a meeting of the Ministry of Transport on May 6, Minister Nguyen Van The directed the Transport Department  and the CAAV to study and propose the resumption of some international commercial routes with limited frequency, giving priority to experts and those travelling for official purposes while strictly observing regulations on COVID-19 prevention and control./.