Vietnamese aviation pegs coronavirus revenue loss at $1 bln

By Doan Loan   February 27, 2020 | 08:26 pm PT
Vietnamese aviation pegs coronavirus revenue loss at $1 bln
Da Nang International Airport is left deserted due to Covid-19 epidemic. Photo by VnExpress/Nguyen Dong.
The novel coronavirus outbreak will cost Vietnamese airlines an estimated VND25 trillion ($1.08 billion) in revenue, the Civil Aviation Authority of Vietnam estimates.

The CAAV has envisioned two Covid-19 impact scenarios for Vietnam’s aviation market in 2020. In the first scenario, where the epidemic is contained before April, carriers in the country would handle a total of 67 million passengers, down 15 percent year-on-year, Dinh Viet Thang, director of CAAV, said at a meeting Thursday.

However, if the epidemic is only contained in June, the number of air passengers is predicted to fall 22 percent year-on-year to 61 million, including 10 million foreign visitors.

Either way, 2020 is likely to be a difficult year for Vietnamese carriers, he said. 

National flag carrier Vietnam Airlines expects the number of passengers to decline by 2.5 million this year, leading to a revenue fall of VND12 trillion ($519 million).

In addition to a plunge in the number of Chinese passengers, Vietnam Airlines is facing a decline in the number of passengers on other international and domestic routes. Earlier, the carrier said it was losing VND200-250 billion ($8.6-10.8 million) per week following the suspension of flights to China.

Leading Vietnamese budget carriers Vietjet Air and Jestar Pacific are also expecting a fall in passengers and revenue.

Vietjet Air also estimates its loss at VND12 trillion, with more losses stemming from the South Korean market as compared with Vietnam Airlines.

Jetstar Pacific forecasts its revenues to fall by VND732 billion ($31.4 million).

The CAAV’s Thang noted that northeast Asian markets like mainland China, Japan, Taiwan and South Korea make up a significant source of revenue for Vietnamese airlines.

Since the Covid-19 outbreak, local airlines have suspended all flight routes to China since February 1, meaning a loss of around eight million passengers this year.

Meanwhile, the number of two-way flights to South Korea has gone down 41 percent compared to last year, standing at 141 round trips per week against 191 in 2019. The plunge happened after the South Korean government declared an epidemic red alert, its highest level of alarm, over the novel coronavirus outbreak.

The number of passengers between Vietnam and South Korea has plunged over 50 percent from an average of 26,000 daily to around 8,000-12,000.

For flight routes to and from Taiwan, the flight frequency has declined to 172 from the previous 231 per week. Vietnamese airlines have cut 34 percent of their flights to Taiwan.

While flight operations related to the Japanese market have not been affected at the moment, carriers are considering reducing flights on these routes as well.

Policy support

Amidst the dire situation for local airlines, the CAAV has proposed financial support to help them partially offset the losses, including reducing 50 percent of landing and takeoff fees as well as flight operating costs for domestic flights.

It has also proposed an import and environment protection tax exemption from March to May.

These measures could help Vietnamese airlines reduce their costs by up to VND1.9 trillion ($81.6 million)

At Thursday’s meeting, Transport Minister Nguyen Van The agreed with these initiatives and said airlines should consider new flight routes to India, where increasing proportions of the 1.3 billion population are taking to international travel, and other domestic destinations.

Vietnam has suspended entry from all areas affected by the coronavirus outbreak under a prime ministerial directive issued Tuesday. The new policy came after the epidemic saw complicated developments in South Korea, Japan, Italy, and Iran.

While Vietnam has discharged all 16 of its Covid-19 infected people and not recorded any new infection for the last two weeks, the global death toll has reached 2,858, mostly in China.

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