Local aviation industry presses for tax and fee exemption

The local aviation industry airlines has lost VND30 trillion ($1.3 billion) since the COVID-19 broke out

The global pandemic has reached Vietnam and other regional countries nearly two months ago now, wreaking great damage among domestic businesses, especially aviation and tourism firms. The Civil Aviation Authority of Vietnam (CAAV) estimated that the epidemic has cost local airlines about VND30 trillion ($1.3 billion) in revenue.

According to the airlines, authorities have quickly joined hands to issue support measures. In February, the CAAV proposed to curtail fees and taxes for affected companies to loosen the financial strains as the outbreak kept spreading.

The string of suggested support measures included import and environmental tax exemptions for fuel as well as a 70 per cent reduction on charges for taking off, landing, and management at aerial ports. Moreover, the authority also mentioned temporarily suspending a range of tax charges (personal income tax, corporate income tax, environmental tax, and among others) until the end of 2020; and issuing loan packages with favourable interest rates.

Airports Corporation of Vietnam (ACV) which operates 21 out of 22 airports in Vietnam, has also requested assistance from the government. The proposed measures consist of extending the payment timeline for airlines as well as applying the lowest leasing price for check-in stalls and other facilities.

Once the costs are reduced, air ticket prices will be more reasonable. Thus, stimulating demand for aviation services.

“If the government provides an exemption from the fees, ticket prices can be reduced by about VND10 trillion ($434.8 million) a year,” said aviation expert Luong Hoai Nam. “The support would be very useful for airlines in these times.”

The expert also said that despite talk of these solutions, none has been carried out as of yet while airlines have been racking up losses in the dozens of million dollars each week in the past two months.

The highlight example is Vietnam Airlines, which, According to Reuters, has reported losses of VND250 billion ($10.87 million) due to cancelling and reducing the number of flights to China.