Airlines expect to receive support packages like Vietnam Airlines
Difficulty is not only for Vietnam Airlines
According to Pham Viet Dung, Chairman of the Vietnam Aviation Enterprises Association, since the beginning of 2020, the outbreak of Covid-19 has had a direct impact on the Vietnamese aviation industry. Statistics show that, by the end of October 2020, the number of commercial flights in Vietnam was only 66% compared to the same period in 2019. If calculated separately from April to the end of October 2020, the number of commercial flights in Vietnam was only 52% compared with the same period in 2019. In the months when the pandemic broke out, this rate was only equal to 13% in April 2020 or 28% in September 2020.
As a fledgling airline, Bamboo Airways is also facing difficulties. Mr. Nguyen KhacHai, Deputy General Director of Bamboo Airways, said that the Covid-19 pandemic has severely affected the operation of domestic and foreign airlines. As for Bamboo Airways, at the peak of the pandemic, the airline’s fleet had to stop working by80% to 90%. On the financial side, besides the additional costs for quarantine and pandemic prevention, the airline has suffered heavy losses in revenue due to the declining need to transport passengers and goods domestically and internationally.
“Bamboo Airways’ finance continues to rely entirely on the sponsorship of FLC Group and capital from credit institutions. Furthermore, Bamboo Airways has great ambitions to become a “five-star airline”, so investment costs will be huge. However, just taking off after a short time, the company faced the‘storm’ of the Covid -19 pandemic, so it is very difficult forcash flow,” Mr. Nguyen KhacHaisaid.
Also an airline heavily affected by Covid-19, Ms. Ho Ngoc Yen Phuong, Vietjet Air’s Deputy General Director, said before the pandemic, the airline’s annual growth rate was over 30% on average. Thereby, Vietjet has served about 100 million passengers and contributed approximately VND9,000 billion in accumulated taxes, fees and charges.
However, due to the influence of Covid-19, the aviation industry fell into a serious crisis. Until now, Vietnamese airlines have declined by over 70 – 75% of revenue and liquidity is affected significantly. As for Vietjet Air, in the first nine months of 2020, the Covid-19 pandemic has caused Vietjet Air losses of about VND2,400 billion. To maintain its cash flow, Vietjet needed loans worth VND10,000 billion whether it sold or transferred assets accumulated overmany years.
Firms also need support
Facing the difficulties, both private airlines Bamboo Airways and Vietjet Air have proposed to have a financial bailout package like Vietnam Airlines to survive andovercome the impact of the Covid-19pandemic.
Ms. Ho Ngoc Yen Phuong said airlines from all countries are supported by the Government to have the potential to balance the competition between domestic and international airlines. Not only Vietnam Airlines, other domestic airlines want to access preferential loans with a term of 3-5 years from the refinancing source of the State. When they recover, companies will pay preferential loans to get through the crisis.
Therefore, on behalf of Vietjet Air, it is recommended to give airlines a 3-5 year loan with the state refinancing source from the State Bank to commercial banks. When they have recovered, the firms will pay concessional interest and loans to overcome the crisis and propose the Government to simplify procedures to disburse these support packages in time.
As for Bamboo Airways, this private airline also proposed to the National Assembly and the Government to consider support packages for private airlines as approved for Vietnam Airlines. At the same time, proposing the Government and relevant agencies to issue supportive and preferential policies for new airlines entering the market such as financial support packages with preferential interest rates, discounts fees for some services duringthe first time of operation.
According to Mr. Nguyen KhacHai, due to its new establishment, Bamboo Airways wants the Government to support the expansion and development of the airline’s fleet. At the same time, to increase the time of support and increase the exemption or reduction for service prices, and reduce the issued flight fuel tax. In particular, reduce the collection of fees such as passenger service fees and security screening fees.
By Xuan Thao/Quynh Lan