Vietnam Airlines in recovery mode after turbulent worldwide troubles

A raft of measures are already in place for now until the end of the year at least

Thai Airways has applied for bankruptcy after losing business. Is Vietnam Airlines going to face a similar scenario and if so, what solutions can be utilised?

We predicted the worst scenario of 2020 would be lost revenues of around VND50 trillion ($2.14 billion), and the aviation industry could be set back by three or four years.

However, since January Vietnam Airlines has set up and carried out many solutions to control the situation. We quickly restructured and filtered the labour force along with reducing salaries. Our policies received the wide support of all leaders and staff who are willing to temporarily leave their job or work unpaid.

The airline has found a way to increase revenue by rising the number of cargo flights. Not only solving the financial matter, Vietnam Airlines targets keeping the supply chain intact to support stable manufacturing and trading activities between here and elsewhere.

In addition, we are eager to work with partners to negotiate acceptable and reasonable solutions to reduce and reschedule expenditures and fees. We are working with such strategic bankers as Vietcombank to increase credit limits, restructure loan operations, and reduce interest rates.

At the same time, Vietnam Airlines proposed to the government to make measures including raising capital, preferential loans, reducing fees, and more to help guarantee cash flow to maintain operation.

With such practical solutions and effective support, we can overcome the obstacles caused by the COVID-19 pandemic. Currently, Vietnam Airlines has recovered most domestic flight routes and plans to completely restore the domestic flight network by June.

We are also working on launching new routes to diversify product portfolio, thus meeting passengers’ travel demand and promoting post-pandemic growth.

Which challenges are Vietnam Airlines eager to solve, and what lessons are being learned?

During the unpredictable COVID-19 pandemic, airlines still suffer fixed expenditures for aircraft rental, maintenance, parking costs, and more. So as with other air carriers, the biggest challenge for Vietnam Airlines is how to balance the cash flow.

The aviation industry is sensitive to the external environment, from climate change and disease to economic and political instability. The industry is specific with a large scale of investment and huge capital requirements along with the participants of guests, passengers, and communities.

For us, the most essential lesson from this crisis is that the airline has to well prepare for all eventualities. We entered 2020 in a very strong position, with a professional team and strong financial background, but still we face severe difficulties.

The second essential lesson we learned is that, even in facing the most difficult situation, we must keep calm to solve internal tasks as well as fulfil community responsibility. This is key for us to develop our business.

To enhance the prevention and control of the pandemic, Vietnam Airlines places strict control on how to protect our staff, our passengers, and the wider community as well. The operation of flights during this period still complies with stringent regulations from the Ministry of Health and the Ministry of Transport.

Passengers will receive instructions on body temperature screening and pre-boarding health declaration. In addition, all passengers are required to wear face masks throughout the flights. Furthermore Vietnam Airlines proactively continues to disinfect the whole aircraft and remove in-flight meals on domestic flights.

Another lesson we withdraw from the pandemic is that our business will be restructured to meet the demands of the new normal. In the risky economic context, businesses need to highlight the goal of effective and sustainable development.

Furthermore, based on the change in consumer behaviour after the pandemic, Vietnam Airlines will have to research and evaluate more carefully to change essential services and businesses to provide better services to clients in the future.

The government has introduced policies to support the business community overcoming obstacles and restore operations. Has Vietnam Airlines experienced and benefited from this preferential support?

All state solutions in reducing fees and taxes bring great support to Vietnam Airlines’ operations to balance and ensure cash flow, maintain payment and liquidity, and keep operations sustainable. This support is a dynamic force to help us restore more quickly in the near future.

Recently Vietnam Airlines introduced a series of generous promotions. What is the reasoning behind the launch of such programmes?

Vietnam Airlines has fired off a promotion distributing ticket price from only VND99,000 ($4.30) each within the frame of a flat price programme for domestic flights, coming out right after the government announced relaxation of social distancing, and called for recovery of socio-economic development.

This has been the most preferential fare from Vietnam Airlines so far, as the COVID-19 pandemic has dramatically halted and slowed down people’s air travelling demand. This programme is expected to contribute to stimulating the aviation and tourism market as the pandemic situation becomes better controlled in Vietnam, thereby creating a resonant motivation for the entire tourism industry to be revitalised, and thus contributing to the country’s socio-economic development.

What has Vietnam Airlines come up with to revive operations and support tourism stimulus programmes as launched by the Ministry of Culture, Sports and Tourism (MCST)?

In order to quickly bring back domestic tourism activities nationwide, as well as get ready to reopen international tourism activities in the coming time when restrictions are loosened, Vietnam Airlines is co-operating with the Vietnam Tourism Association (VITA) to implement domestic tourism stimulating programme nationwide, from now until the end of 2020.

The programme calls on tourism businesses to develop new, unique stimulus products with the competitively-priced services and attractive promotions for visitors, on the basis of ensuring safety for travellers, reducing prices but not service quality, and keeping increasing the number of services.

Opening the national domestic stimulus programme, as well as responding to the “Vietnamese travel Vietnam” initiative launched by the MCST, Vietnam Airlines is also co-operating with the VITA for the “Vietnam - The Bright Destination” scheme.

As a pioneer, Vietnam Airlines is also working with other credited travel agencies in the market such as HanoiTourist, Saigontourist, Vietrantour, Vietravel, and Redtour to build up preferential tourism products with a maximum 40 per cent discount on tickets when traveling in a group of at least six people. Air tickets are also included in the collaborative tour packages between airlines and travel agents.

This month, we have also launched five more routes: Ho Chi Minh City - Tuy Hoa, Haiphong - Nha Trang, Vinh - Dalat, Vinh - Buon Ma Thuot, and Thanh Hoa - Buon Ma Thuot. This will help stimulate domestic tourism and, in the coming time, the airline will continue increasing loading capacity on domestic routes to prepare for the recovery of Vietnam’s aviation market.

What are the restructuring plans for Jetstar Pacific after Qantas completes the stake sale to Vietnam Airlines? Is it a good move to acquire when Vietnam Airlines is facing losses?

We are in regular dialogue with our partner Qantas about Jetstar Pacific, particularly given the challenges facing all carriers at present. However, we don’t comment on speculation and we have no material changes to announce.