HANOI – It is not until 2025 that the local aviation sector can fully recover due to rising fuel prices and the slower-than-expected reopening of international markets, according to domestic airlines.
The Vietnamese aviation market has recovered fast and the country is among the 10 fastest-growing aviation markets.
Dinh Viet Thang, head of the Civil Aviation Authority of Vietnam (CAAV), said in the first half of the year, local airlines transported 20.1 million passengers, surging 56.1% year-on-year. Of the total, there were 667,000 international guests and 19.5 million domestic passengers, skyrocketing over 1,000% and 51.8%, respectively.
However, domestic air carriers forecast that their international source markets cannot recover fully until the last quarter of next year and they can generate the same profit as of 2019 by 2025.
According to experts from the International Air Transport Association, Vietnam’s aviation sector will gain positive growth in domestic and international markets. However, the fuel prices, which have doubled year-on-year, have led to overspending of trillions of Vietnam dong by local air carriers.
In addition, many international markets, such as Japan, China and South Korea, have still imposed Covid restrictions on Vietnamese passengers, slowing the recovery of Vietnam’s international markets.
In the coming time, the aviation sector’s recovery will be slow as tourists account for up to 70% of the total air passengers.
A Vietnam Airlines leader said before the Russia-Ukraine military conflict, the rising fuel prices resulted in losses of VND218 billion for the airline. This year, fuel prices have shot up due to the global economic uncertainty, the energy market upheaval and global geopolitical issues.
Although local airlines have reopened air routes to big markets, such as India, Northeast Asia and Southeast Asia, most of the passengers from these markets are entrepreneurs, experts and those returning home. Meanwhile, the number of tourists, accounting for a majority of the number of air passengers, remains small. Two large source markets—China and Russia—remain untapped.
Vietnam Airlines has worked out many scenarios for international markets, prioritizing air routes to Northeast Asia, Southeast Asia and other markets with a high number of customers.