Aviation industry spirals deeper than worst-case scenario forecasts

Aviation is doing worse than expected, with international passenger volume down 99 per cent in April

In a report sent to the government, the Ministry of Transport (MoT) assessed that the aviation industry is suffering the grievest losses from the global pandemic. Since April 1, airlines around the globe have ceased most international and domestic flights due to social distancing. Passenger volume is only 1-2 per cent of what it was before the pandemic.

At the end of February, after the pandemic broke out in Wuhan (China), the MoT drew up two scenarios. If the pandemic is brought under control before April, total passenger count is forecast to reach 67 million, down 15 per cent on-year. In the worse scenario, if the pandemic is only reined in by the end of the second quarter, passenger volume will be 61.2 million, down 22.6 per cent on-year.

However, in fact, passenger volume reached 188,000 across all airports in April, including 21,000 international visitors, down 99 per cent, and 64,000 tonnes cargo, decreasing by 93 per cent on-year.

Thus, the MoT said that the aviation industry is actually doing worse than predicted in either scenarios. This prompted a revision to estimates to 43 million passengers in 2020, down 46 per cent on-year, with the expectation that the industry will recover by the end of the year.

Among state-owned enterprises, Vietnam Airlines has suffered the largest impact with a 26 per cent drop in consolidated revenue in the first quarter. The traffic volume operated by Vietnam Air Traffic Management Corporation (VATM) reduced by 60 per cent.

In addition to aviation, the MoT also reported on-year decreases of 40-80 per cent in revenue and volume of road transport. Since early April, passenger transport has halted totally, while cargo transport declined by 40 per cent on-year.

In the maritime industry, cargo volume did not reduce sharply, however, the volume of ships and passengers also dropped. Particularly, only two ships carried international visitors in March arriving in the country, decreasing by approximately 100 per cent.

Thus, the MoT recommended the government to order the State Bank of Vietnam to reduce interest rates and delay the payment deadlines for transportation firms that are suffering a lot of losses. The MoT also asked the Ministry of Finance and Vietnam Social Insurance to consider delaying payment deadlines of taxes and fees like value-added tax, corporate income tax, land lease, unemployment insurance, as well as social and health insurance.