Carriers concoct strategies for uncertainties down the road

Source: International Air Transport Association

Nearly a dozen routes of all domestic airports arriving in the central city of Danang, including 200 round-trips every day, have been halted since a new coronavirus outbreak on July 28, as well as leading to the remarkable decline of the number of flights to other locations.

Budget carrier Vietjet has deployed a variety of solutions such as focusing on cargo transportation and ancillary services. Vietjet is the first such airline to be approved to carry cargo on cabin since April. “The debt ratio is among the lowest range in the world’s aviation industry, so Vietjet continues to implement a long-term loan plan to overcome the crisis,” a representative said.

To stay afloat, Bamboo Airways has also carried out solutions to offset losses caused by the halt of all international routes and the sharp decrease of domestic flights. The airline is focusing on cargo transportation for both humane and trade goals, rental flights, and carrying foreigners and cargo to Europe as well as releasing some new services. This is in addition to reducing the flight network, cabin crews, and other employees.

However, in opposition to the worry of other players, Bamboo Airways CEO Trinh Van Quyet still believed in the performance of the airline despite the pandemic. “We are still going forward with the expansion of the aircraft fleet number to 50 aircraft as the goal set since last year, if the demand for transport recovers well and the market changes positively.”

Aviation is said to be the most financially damaged sector hit by the pandemic. By the end of the second quarter, Vietjet recorded a slump of 54 per cent on-year in air transport revenues, and losses of VND1.12 trillion ($48.8 million). For the first six months of 2020, the airline’s loss in air transportation business stands at VND2.1 trillion ($91.8 million).

Meanwhile, Airports Corporation of Vietnam recorded a post-tax losses of over VND365 billion ($16 million) from April to June as its revenues plunged 76.6 per cent from the same period last year to over VND1.046 trillion ($45.5 million).

Meanwhile, Bamboo Airways reported over VND1.5 trillion ($65.2 million) in losses for the first quarter, and all its domestic flight routes are halted until late October at least.

Following a proposal by airlines and authorities, the Vietnamese government is considering an aviation bailout, including providing exemptions from taxes, fees, and environmental taxes for flight fuel, along with providing financial packages and extending debt repayment terms.

However, economist Pham Chi Lan emphasised the need to make this support equitable and transparent. She said all airlines have contributed to the state budget and socioeconomic development, so they should receive equal support based on factors like market share, contribution, and the amount of losses. “We should carefully calculate the losses of each airline and compare it to their revenue and profit to propose a proportional support instead of simply offsetting the bad performance of airlines,” said Lan.