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Ministry wants environment tax on aviation fuel to stay low until late 2021
By Hoang Thang
Tuesday,  Nov 24, 2020,10:31 (GMT+7)

Ministry wants environment tax on aviation fuel to stay low until late 2021

By Hoang Thang

A Vietnam Airlines aircraft. The Ministry of Finance has proposed maintaining the lowered environmental protection tax on flight fuel at VND2,100 per liter until the end of 2021 – PHOTO: VNA

HCMC – The Ministry of Finance has proposed maintaining the lowered environmental protection tax on aviation fuel at VND2,100 per liter until the end of 2021 instead of late 2020 to support local air carriers.

If the proposal is passed, the tax on flight fuel will return to normal at VND3,000 per liter from January 1, 2022.

The local aviation market will gradually recover this year and next year, but will still face multiple challenges, according to the ministry.

The aviation industry has been hit hard due to a sharp drop in the number of passengers and flights due to the coronavirus pandemic.

At the end of 2020, Vietnam Airlines is expected to see the number of flights and passengers dip 32,700 and 5.67 million, respectively.

Meanwhile, local airlines are burdened with fixed service costs, including aircraft leasing costs, parking fees and other charges, to maintain their operations.

Vietnam Airlines must pay aircraft leasing costs at US$30 million per month, while the monthly cost shouldered by Vietjet stands at US$20 million. The monthly parking fees paid by Vietnam Airlines, Vietjet Air and Bamboo Airways are VND6 billion, VND3.6 billion and VND1.24 billion, respectively.

These costs may affect the performance of local carriers, especially Vietnam Airlines, which is expected to lose VND49.3 trillion.

The proposal to continue cutting the environmental protection tax on flight fuel will help ease the burden on local airlines, said the Ministry of Finance.

Earlier, the National Assembly Standing Committee gave the green light to cut the environmental protection tax on flight fuel from VND3,000 to VND2,100 per liter until late 2020 to help eliminate the difficulties facing local airlines due to the coronavirus pandemic.

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