Vietnam’s aviation industry struggles with Covid-19 epidemic

08:56 | 26/03/2020 Economy- Society

(VEN) - Vietnamese airline carriers are facing a slump caused by the spread of Covid-19, despite sharp fare reductions. The domestic aviation sector is seeking ways to revive traffic and has drawn up scenarios to cope with the complex development of the epidemic. 

vietnams aviation industry struggles with covid 19 epidemic

Disinfecting airplanes to ensure passenger safety

Civil Aviation Authority of Vietnam (CAAV) data show that since the beginning of 2020, the number of passengers transported by domestic airline firms, especially foreign passengers, has dropped sharply. Specifically, in February, nearly 8.1 million passengers were transported through Vietnamese airports, down 11.6 percent compared with February 2019. This number included 2.4 million foreign passengers, down 29.8 percent, and 5.7 million domestic passengers, down 0.7 percent. Vietnamese airline firms transported 3.7 million passengers, down 13.7 percent compared with February 2019. This number included only 870,000 foreign passengers, down 39.5 percent, and 2.8 million domestic passengers, down 0.7 percent.

Ticket prices for all flights have been reduced to very low levels. Prices of one-way tickets from Hanoi to Ho Chi Minh City now range between VND99.000-299,000, not including taxes and fees. The considerable price reductions, however, have not had much of an effect. Tourism both domestically and abroad has been scaled back. Flights to attractive tourist sites such as Phu Quoc, Nha Trang and Quy Nhon have also become surprisingly cheap.

A representative of Vietnam Airlines said that the epidemic has caused damage amounting to VND200-250 billion per week for the national flag carrier. It had to cancel more than 300 weekly flights to China, alone. In the first half of February, the firm’s revenue decreased by 20-25 percent.

According to experts at the Training and Research Institute of the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), the aviation sector is suffering the heaviest adverse impact of the Covid-19 epidemic. A strong decline of revenues and profits is forecast for the first and second quarters and even extending the whole year, depending on the development of the epidemic.

The CAAV has drawn up three scenarios for the air transport market in 2020.

Accordingly, if the epidemic ends in April, which is the most optimistic scenario, the total number of passengers in the market will be 80 million, and the number of passengers at Vietnamese airports will reach 119 million. If the epidemic ends in June, which is the medium-range scenario, the respective figures will be 74.6 million, down 5.7 percent, and 111.6 million, down 4.2 percent. If the epidemic lasts until August, which is the worst-case scenario, the total number of passengers will decrease by 17.2 percent to 65.5 million, and the number of arrivals and departures through Vietnamese airports will drop 15.5 percent to 98.5 million.

Control measures in Vietnam over the past several weeks have been effective, and domestic airlines are seeing signs of recovery. Recently, Vietnam Airlines resumed all on-board services for passengers on domestic and international flights of up to two and a-half hours, including food, drinks and entertainment.

Since the Covid-19 epidemic began, in an effort to protect passenger health, Vietnam Airlines has focused on disinfecting airplanes, adjusting on-board temperature and increasing maintenance of the air filtering systems according to warnings by the World Health Organization and airplane manufacturers.

Domestic carriers are preparing to deal with the effects of the epidemic to revive and stimulate demand for travel services, as well as to showcase Vietnam as a safe tourist destination.

The International Air Transport Association (IATA) has predicted the Covid-19 epidemic would erase US$29 billion of this year’s global airline revenues, mostly for carriers in the Asia-Pacific region.

Nguyen Mai