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Airlines busier, but still incurring losses

Despite the increase in the number of passengers, air carriers are still incurring losses due to the fuel price increase.

Head of the Civil Aviation Authority of Vietnam (CAAV) Dinh Viet Thang told a conference on June 28 that the number of air passengers is on the rise and airports have become bustling again.

In the first six months in 2022, 205,000 flights were organized, including 66,700 transit flights, up 28 percent year on year, with a total of 43.4 million passengers, up by 65.5 percent. 

The number of passengers carried by Vietnam’s airlines was 21.4 million, including 20.8 million local passengers, up by 62.4 and 57.3 percent, respectively.

However, the restoration of international air routes is still modest. The number of flights between Vietnam and South Korea remains low and South Korea has set complicated requirements on entries.

For China, there are only two flights a week because of this country’s Zero-covid policy. The other markets such as Taiwan and Japan are opening step by step. 

Thang said that Vietnam hopes to resume air routes to Taiwan, Japan and South Korea, and increase flights to China in the last six months of the year.

Vietnam Airlines’ deputy CEO Trinh Hong Quang said the recovery of international air routes was below expectations.

A report showed that foreign travelers to Vietnam in H1/2022 were nearly 2.4 million, or 11 percent of H1/2019. 

Meanwhile, the rise in air fuel price has put airlines into a difficult situation, particularly Vietnam Airlines, Quang said. If the fuel price increases by $1/barrel, the airline’s expenses on fuel will increase by VND12 billion.

In 2019, air fuel accounted for 28-29 percent of Vietnam Airlines’ total expenses. At present, it is 38-40 percent. If the fuel price stands at $150-156 per barrel until the end of 2022, the additional expenses would be VND8 trillion.

CAAV’s Thang said because of the fuel price hike, air carriers’ revenue cannot make up for operation costs. Domestic airlines may incur a loss of VND100 billion each month.

US$1 = VND23,000

Vu Diep


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