Govt' to consider zero-interest loans for all airlines

The Government is considering a 25 trillion VND zero-interest loan package for all Vietnamese airlines in a bid to support the industry during the pandemic. (Photo: VNA)

Hanoi (VNA) - The Government Office has instructed the Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Transport and the State Bank of Vietnam to study a proposal by the Vietnam Aviation Business Association (VABA), in which the airline industry is to gain access to 25 trillion VND (over 1.1 billion USD) of zero-interest loans.

The loans, according to VABA, are intended to help the airlines to cover recurring expenses, acquire supply and new machinery and to perform maintenance duties during the pandemic. The loan amount will be subject to the size of each airline, its share of the market and the amount it contributed to the State budget.

The association cited a 4 trillion VND, zero-interest, 3-year-term loan granted to Vietnam Airlines as a basis for their proposal, saying the Government must ensure a level playing field. In addition, it has also demanded a 70 percent cut in environmental tax for all the airlines.

VABA's Chairman Pham Viet Dung said the tax was no longer applicable as almost all international and domestic flights have been shuttered. VABA, therefore, asked the Government to reduce the tax from 3,000 VND, or 0.13 USD, to 1,000 VND from now until June 6, 2022.

In addition, VABA asked the Government to consider a proposal to slash 30 percent off the airlines' income tax for 2020 and the first half of 2021, 50 percent off VAT tax, industry workers' income tax and 50 percent off taxable amount on spare parts for aeroplanes.

The association said the third and fourth outbreak of the novel coronavirus in Vietnam resulted in a 90 percent drop in revenue for the airlines, compared to the pre-pandemic level.

A VABA report said almost all international and domestic flights have been stopped since May. Revenue dropped by 60 percent compared to the previous period as airlines reported a combined loss of 16 trillion VND in 2020.

The airlines have had to pay more than 100 billion VND (4.4 million USD) every day while 80-90 percent of their fleets were grounded, according to Bui Doan Ne, Vice President of the Vietnam Aviation Business Association (VABA).

Short-term debts due for payment among the three largest airlines have reached a total of 36 trillion VND, with VNA alone accounting for 20 trillion VND. VABA has asked banks for loans worth 30 trillion VND, of which 10-12 trillion VND allocated to VNA, 10 trillion VND to Vietjet, 5 trillion VND to Bamboo Airways, 5.7 trillion VND to Pacific Airlines and 1 trillion VND to Vietravel Airlines.

In a recent development, VABA has sent a number of proposals on how to support the airline industry's recovery. The proposals include faster vaccination of the population, a standardised COVID-19 testing protocol, internationally recognised vaccine passports and the establishment of safe travel corridors for international visitors.