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Wednesday, July 24, 2024

Vietjet, Bamboo Airways seek Government financial aid

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HCMC – Private air carriers Vietjet and Bamboo Airways have petitioned the Government to provide them with financial aid packages such as the one granted to Vietnam Airlines so they can overcome the difficulties caused by Covid-19.

At a recent seminar themed “Overcoming crisis, developing Vietnam’s aviation sustainably”, Vietjet Deputy General Director Ho Ngoc Yen Phuong said the firm incurred huge losses in the past nine months. It has sold assets, cut salaries by 50%-70% and paid minimum salaries of VND8-10 million to other staff, the local media reported.

She said airlines in other countries, such as Thailand and China, were offered financial support. Once Vietnam resumes international flights, these air carriers will fiercely compete with local airlines.

Airlines will continue facing difficulties with liquidity in the next two to three years due to a plunge in revenues.

The National Assembly (NA) has allowed the State Bank of Vietnam to direct credit institutions to offer low-interest loans worth VND4 trillion (US$172.7 million) to Vietnam Airlines.

Moreover, the national flag carrier has been allowed to issue shares to its existing shareholders to raise its charter capital by an additional VND8 trillion.

Therefore, Vietjet proposed the central bank direct commercial banks to offer it loans of VND4 trillion with preferential interest rates in three to five years. Vietjet will pay the principal and interest in 2023-2025, Phuong said.

A representative of Bamboo Airways also proposed the NA and Government consider financial packages for private airlines. Despite its small scale compared with Vietjet and Vietnam Airlines, it has been hit hard by the pandemic.

Nguyen Tien Hoang, deputy head of Vietnam Airlines’ Planning and Development Department, said the local aviation sector might suffer losses of US$4 billion this year. Vietnam Airlines’ revenue is forecast to plummet by half, while its losses may reach VND14-15 trillion.

Local airlines also proposed extending the period that take-off and landing prices are cut by half until the end of next year and reducing the environmental protection tax by 70% for airlines. In addition, commercial international flights to countries that have controlled the pandemic should be allowed to resume operations.

At the seminar, Pham Van Hao, deputy head of the Civil Aviation Authority of Vietnam, said the authority had worked with airlines to propose the Government allow international flights to Vietnam. The aviation sector will need three more years to recover to the pre-pandemic level.

Associate Professor Dr. Tran Dinh Thien, a member of the prime minister’s economic consulting team, said local air carriers depend on the domestic market and the tourism sector to recover.

He suggested the Government support private airlines, besides Vietnam Airlines, so they don’t feel left out.

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