Vietnam's railway network blames budget airlines as bottom line goes south

By Phuong Dong   July 4, 2017 | 06:00 am PT
Vietnam's railway network blames budget airlines as bottom line goes south
The railway sector lost track for revenue last year, and much of the blame falls on low-cost airlines and high-quality coaches. Photo by VnExpress
The finger-pointing parade goes unabated in Vietnam's transport sector.

Turf wars have been breaking out across Vietnam's transport sector in recent months, and it seems no matter what your preferred method of getting from A to B is, there's always somebody complaining about losing out. 

Traditional xe om (motorbike taxi) drivers in Vietnam have been accusing modern ride-hailing services like Grab of straying into their territory, while top taxi firm Vinasun has lambasted Grab and Uber for gobbling up its profits.

Not to be left out of the finger-pointing parade, Vietnam Railways (VNR) is now blaming budget airlines and luxury coaches for dwindling passenger numbers.

In its latest financial report, the company said its revenue dropped 11 percent last year to VND6.52 trillion ($287 million), marking the fourth year in a row its revenue has fallen.

Around 9.8 million people traveled by train last year, a drop of 1.4 million from 2015, it said.

But what did the country's main railway operator expect would happen when airfares became more affordable and coach services more comparable?

The air sector served 52.2 million passengers last year, up 29 percent from 2015, and the domestic sector alone soared 30 percent to 28 million passengers, based on aviation authority data.

The railway company also blames its situation on a bridge that collapsed in the southern province of Dong Nai in March, saying the incident shut down the North-South railway and caused estimated losses of VND535 billion.

The government has agreed to spend VND2.35 trillion on developing the railway sector over the next five years, but VNR says that will only allow it to pay its debts and catch up from previous years.

The railway network accounts for 1.14 percent of passenger transport in Vietnam, compared to 96 percent who travel by road and 2 percent who choose to fly, according to official data. Most freight is also now transported via road.

In an attempt to win back passengers, the railway sector has launched an online booking service, and some companies have rolled out first-class trips with restaurant cars.

A five-star train was launched this year from Ho Chi Minh City to the coastal resort town of Nha Trang, and passengers from Hanoi can now enjoy a touch of class on their way to the northern highlands town of Sa Pa.

Major stations across Vietnam have also started to offer free wi-fi.

VNR said it aims to earn VND7.8 trillion in revenue and VND138 billion in profit this year, and double its passenger numbers by 2020 by upgrading 100 trains.

Last month, lawmakers passed amendments to the Railway Law, promising incentives to investors looking to resuscitate a now unpopular mode of transport. 

The law, which describes railways as crucial to the national transport network, will take effect in July next year. It will potentially give train-related projects easier access to land and funding. Investors will also have access to cheap loans and tax breaks. 

And while lawmakers are trying to give VNR a helping hand, there is a distinct lack of sympathy among the general public.

Some VnExpress readers are calling on the sector to look at itself first before pointing the finger of blame at its 'rivals'.

Some say the current service is slow and outdated, while others are asking why railway networks in other countries are so much better and can still compete with air travel.

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