Aviation market aiming for a breakthrough recovery

Vietnam Airlines was not alone in struggling financially over the past couple of years, Le Toan

According to the first-quarter report from the Civil Aviation Authority of Vietnam (CAAV), the sector saw tremendous growth of 441 per cent on-year in the number of international tourist arrivals accommodated by Vietnamese air carriers between January and March.

In the period, the number of international tourist arrivals via Vietnamese airports reached 321,000, up 176.2 per cent on-year, while overseas cargo transport hit 292,000 tonnes, up 21.1 per cent.

Flights to Singapore, Thailand, the United States, France, Germany, the United Kingdom, and others have been available since February, with frequency gradually increasing alongside the comprehensive opening of the market on March 15.

Currently, three Vietnamese airlines join 23 international air carriers in operating flights to 20 countries and territories. This is eight markets fewer than the 2019 peak, but there are set to be additional flights from Singapore, Taiwan, and South Korea to Danang from later this month.

Last month, an airline from Singapore operated the highest number of flights to Vietnam with 45 return flights each week, but this is still only around one-third of the volume seen in 2019.

While the market saw robust growth in the international tourist segment, the domestic segment still saw a fall (see box).

As of March, the domestic market has six Vietnamese airlines operating 55-60 domestic air routes linking Hanoi, Ho Chi Minh City, and Danang with 19 local airports.

After several months of moving in the right direction in general, airlines are pinning high hopes of recovery in the rest of the year. National flag carrier Vietnam Airlines has seen improvement, with losses falling significantly by VND1.3 trillion ($56.52 million).

The carrier now operates 55 air routes, up 16 from 2019, and has resumed regular flights to 15 international markets. This month it plans to run three more flights to Singapore and two to India, while considering operating new flights to the Philippines.

Similarly, Vietjet also has plans to increase flight frequency of many international air routes between Vietnam and South Korea, Taiwan, Japan, Singapore, and Thailand, as well as others.

Meanwhile, Bamboo Airways is operating regular flights to Japan, Taiwan, South Korea, Germany, the UK, Australia, and more, and wants to add Singapore and Thailand as soon as possible.

Nguyen Phuoc Thang from the CAAV said that this is just the initial stage of the reopening, but it is hoped that the market will recover quickly. “From now to late August, air carriers will focus on a fast increase in flights to serve tourist activities,” he said.

Earlier this year Bao Viet Securities JSC forcast the numbers of domestic and international tourist arrivals in 2022 to reach 30 million and five million, respectively, up 89.9 and 4.6 per cent on-year.

The International Air Transport Association, in its latest forecast of the sector’s post-pandemic recovery, expects air traffic to eventually exceed 2019 levels in 2024.