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Vietnam’s private airlines appeal for government support at Hanoi seminar

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A Vietnam Airlines aircraft. VNA/VNS

Vietnam’s private airlines appeal for government support at Hanoi seminar

Vietnamese aviation firms appealed for government support to overcome the difficulties caused by the Covid-19 pandemic at a seminar recently held by the Vietnam Aviation Business Association (Vaba) in Hanoi.

Bamboo Airways deputy director-general Nguyen Khac Hai told the seminar last week that private airlines needed the same support that was being afforded to state airlines.

Hai said: “Bamboo Airways has asked the National Assembly and the Government to consider the same support packages for private airlines that have been approved for Vietnam Airlines.”

The pandemic has severely affected the operation of airlines, and Bamboo Airways had lost up to 90 per cent of its business at the peak of the pandemic, Hai said.

Although the firm has not disclosed details of its business results this year, Hai said additional costs for quarantine and pandemic prevention had added to the airline’s losses.

In response to this, Hai said government financial support was necessary for firms to maintain cash flow alongside support policies such as tax breaks.

Considered a private airline with a strong financial foundation, VietJet Air is forecast to lose money this year. Vietjet vice-president and chief financial officer Ho Ngoc Yen Phuong told local media that VietJet Air needed 10 trillion dong ($435 million) in loans.

“Other domestic airlines want access to preferential loans over three to five years from the State to overcome the crisis,” she said, asking the government to simplify procedures to disburse support packages in a timely manner.

Having been issued a support package of four trillion dong at four per cent interest recently, Nguyen Tien Hoang, deputy head of the Development Planning Department at Vietnam Airlines, said the firm was still facing difficulties, estimating the recovery would take three to four years.

Hoang forecast that the local aviation sector would lose $4 billion this year, of which Vietnam Airlines’ revenue would fall by $608-652 million.

“Although the domestic market has recovered, purchasing power remains weak and ticket prices have dropped sharply.

“The only international routes operating are repatriation flights. The pandemic has created a long term psychological concern that has halted the aviation industry,” Hoang said.

Hoang said the government and Ministry of Transport should not consider licensing new airlines before the market recovers.

According to the International Civil Aviation Organisation (ICAO), there were two scenarios for the aviation industry. The first was a freefall followed by rapid growth, whereas the second was a three- to five-month baseline.

The ICAO forecast the aviation market would decline 48-71 per cent depending on the pandemic.

Vaba deputy director Pham Van Hao said the association was coordinating with research firms to submit a plan to the government regarding reopening international flights.

Hao said: “In the most positive scenario, the aviation market will take three years to bounce back to where it was in 2019.”

Economist Tran Dinh Thien said given the government held an 86 per cent stake in Vietnam Airlines, the support package was transparent and marketable.

However, he said other airlines also needed refinancing interest rates from the government to stand firm and bounce back when the global aviation market recovered.

Thien said local airlines should focus on the domestic market as a means to survive and recover from the pandemic.

“The pandemic has changed the structure of the global aviation industry and created opportunities for local aviation firms to better serve local customers.”

According to the association, last year, local airlines carried more than 136 million passengers and operated more than 900,000 flights. However, the pandemic had disrupted economic activities, causing great losses to the aviation industry.

Deputy Minister of Transport Le Anh Tuan said the ministry would continue to monitor the situation and formulate policies to help the aviation industry recover.



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