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Thursday, October 29, 2020

Domestic routes resuming, international flights pending

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As the Covid-19 epidemic is now under control in Vietnam, domestic flights have been operational again, with seat distancing no longer applied. The local aviation market is thus on its way to complete recovery, which may take a year or so. Meanwhile, the situation is unpredictable for international flights since the epidemic remains complicated in many countries.

As Covid-19 has been temporarily contained in Vietnam, the Ministry of Transport has allowed air carriers to resume their domestic services. Contrary to the gloomy picture during social distancing, airports in the country are bustling again.

As per the statistics of the Airport Corporation of Vietnam (ACV)—when Covid-19 did not break out, in early January 2020—the number of domestic flights were about 1,500. In April, when social distancing measures were imposed nationwide, only 51 domestic flights took off and landed everyday. On April 5, there were only 34 flights.

However, since social distancing was revoked on May 7, the number of flights has been going up. Currently, some 644 flights take off and land everyday, with the peak falling on May 10 when the total was 765. The tally of domestic flights taking off and landing in May is projected by ACV to be equal to 60% of the time before the epidemic.

Apparently, the domestic aviation market seems to be recovering rapidly. It is partly because of reduced airfares. Ticket prices for May and June have been brought down in an attempt to attract air travelers. The two private carriers Vietjet Air and Bambo Airways have launched a multitude of low-cost ticket sale programs. For example, Vietjet, after finishing their program for selling one-way tickets at VND18,000 each (excluding taxes and fees), has proceeded with another in which tickets are sold at VND0 (also excluding taxes and fees). Bambo Airways, similarly, are offering one-way tickets at the price of VND45,000 (excluding taxes and fees). In addition to the sale of cheap tickets, this airline also sells air tickets and hotel rooms as a package, and runs a program via which air tickets may be paid in installment with zero interest.

Having rarely implemented ticket promotion, Vietnam Airlines is now also in the “race” for airfare discounts and charge reduction of accompanying services to lure passengers. Recently, the national flag carrier has offered one-way tickets at VND99,000 (or VND579,000 including taxes and fees). Since May 18, tickets at prices starting from VND49,000 (VND525,000 including taxes and fees) have been available for Vietnam Airlines-Jetstar Pacific code-share flights.

To earn some revenue in the tough times when international flights have not resumed yet, from May 16 to 27, Vietnam Airlines operated five new domestic services including Hai Phong-Nha Trang, Vinh-Da Lat, Vinh-Buon Ma Thuot, Thanh Hoa-Buon Ma Thuot, and HCMC-Tuy Hoa. The number of air passengers has been growing fast because of airfare cuts and local hotels’ policies on discounted room rates. Air carriers hope lower ticket prices will stimulate travel demand, and they will thus be able to earn some to partly offset the loss of their revenue.

During the Reunification Day (April 30) and International Labor Day (May 1) holidays, 230,000 passengers were carried on airplanes (an average of 39,000 passengers per day, equal to 38% of the average daily rate of 2019).

On the recovery of the domestic aviation market, Dinh Viet Thang, general director of Civil Aviation Administration of Vietnam (CAAV), said the number of airline passengers during the summer travel season this year would be only 60% of the figure in 2019. Students will still go to school around this time, said Thang, while the number of tourists is falling due to fears of the epidemic. “Although the domestic market is showing signs of recovery, it is not until 2021 will it be fully recovered,” he predicted.

From the perspective of air carriers, Le Hong Ha, deputy general director of Vietnam Airlines, said the prospect of a sluggish summer travel season this year would thwart domestic airlines’ efforts to immediately recover. Therefore, Vietnam Airlines is joining hands with players in the travel industry —including tour operators, hotels and resorts—to draw up ticket demand stimulus sale programs, offering preferential fares for domestic flights or packages of tickets for multiple services. Therefore, the number of air travelers is expected to rise again.

No schedule for international flights yet
While air carriers are restarting their domestic services, international flights are still inactive as the situation of Covid-19 in other parts of the world remains complicated. Currently, only a few flights are licensed to carry Vietnamese citizens back to the country, as airlines are not yet permitted to operate international flights commercially.

Dinh Viet Thang said the international aviation market was unpredictable at the moment and that the resumption of international flights would heavily depend on the developments of Covid-19 in the key markets for tourism. It is probably not until the end of 2021 will the international aviation market be as good as it once was in 2019, he predicted.
Meanwhile, Le Hong Ha of Vietnam Airlines forecast that international markets such as China, South Korea and Japan, where the epidemic is now well controlled, may recover faster than others. The flag carrier has considered several scenarios, gathered resources and drawn up programs for customer care in these countries once Covid-19 is kept in check given the fact that these are its major markets.

Since it is unknown when international flights will resume, Vietnam Airlines has to shift their focus to cargo transport. It is estimated that Vietnam Airlines will add more than 360 flights for international and domestic freight this May. Revenue from increased cargo transport is forecast to reach VND800 billion, a fairly modest sum which is however very important at present.

As the passenger transport market has not fully recovered, Dinh Viet Thang recommended airlines should step up the operation of cargo flights and domestic services for passengers. CAAV said it will offer carriers the greatest support possible to restore their domestic market share through the issuance of flight permits and policies on tax reduction already approved by the Government.

By Le Anh

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