Revenue and profit growth in the last quarter of 2021 have been financing the aviation sector in the beginning of 2022 as questions linger over growth prospects.
The full lifting of restrictions on international flights from February 15 and the introduction of tourism stimulus programs augur well for the recovery of the aviation industry
According to analysts, the tourism and aviation sectors must quickly seize the opportunities to recover. Infrastructure barriers must be removed, tourism and aviation development policies need to be more open, and international flights must resume as soon as possible. Prior to the pandemic, Vietnam was one of the five fastest-growing countries in the world in terms of aviation. Tourism revenue, meanwhile, currently accounts for 6.7 per cent of GDP.
The Civil Aviation Authority of Vietnam (CAAV) has officially increased flight frequency on certain international routes and is closely monitoring the situation with a view to actively increasing domestic flights when many routes post occupancy rates of up to 90 per cent as Tet approaches.
The Civil Aviation Authority of Vietnam (CAAV) has proposed increasing regular flights to and from Europe and Australia and at the same time raising the frequency of existing flights. The aviation sector conducted 64 flights carrying 7,847 passengers to Vietnam in the first week of 2022, when the country “reopened its skies”.
The Ministry of Finance has proposed that the reduction on the environmental protection tax for jet fuel be changed from the current 30 per cent to 50 per cent from January 1 to the end of 2022. If approved, the 2022 budget would see revenue fall by more than VND1.5 trillion ($66.11 million). The policy will increase the financial capacity of airlines to overcome the difficulties from Covid-19.
Flight numbers were quite low during the first days of a pilot reopening of domestic flights, at just 50 per cent of those scheduled. The Civil Aviation Authority of Vietnam (CAAV) has proposed increasing flight frequency to six flights a day on the three largest routes in the country - Hanoi-Da Nang, Hanoi-Ho Chi Minh City, and Da Nang-Ho Chi Minh City.
On October 10, the first day of domestic flights being reopened, only eleven official commercial flights were conducted, while 27 others were canceled due to storms and local quarantine regulations.
In addition to objections over the imposition of airfare floors, experts believe there should be a policy to manage and regulate airfares and healthy and fair competition between airlines.
The Civil Aviation Authority of Vietnam has increased the floor prices of plane tickets, which may cause passenger demand to fall and affect other sectors such as tourism and travel.
Industry analysts have forecast that the domestic aviation sector will recover to pre-pandemic levels next year, with international aviation fully restored by 2023. Private carriers have proven more resilient, from a more positive financial situation. According to Vietnam’s aviation plan, the country will have 28 airports by 2030, including 15 domestic airports and 13 international airports.
The Civil Aviation Authority of Vietnam (CAAV) has suggested that vehicles used to transfer passengers to and from Hanoi’s Noi Bai International Airport be considered “green lane” means of transport, which are prioritized to operate in special lanes into Covid-19 prevention and control areas. It has also suggested that there be written instructions for Vietnamese citizens wanting to return to Vietnam as well as guidelines for airlines carrying passengers from Vietnam to international destinations, so they will not be forced to return to the country.