The Transport Ministry is asking for an aviation service fee subsidy for local airlines that have suffered an initial economic loss of over 30 trillion VND (1.29 billion USD) due to the COVID-19 outbreak.
Vietnam Airlines aircraft
In the latest document on the disease’s impact on the transport sector sent to the Ministry of Planning and Investment, the Transport Ministry said that all Vietnamese airlines have grounded flights to and from China and the Republic of Korea, cut 34 percent of flights to Taiwan (China) and 92 percent of flights to Hong Kong (China). While all 160 flights to Japan operating as usual so far, carriers are assessing the epidemic situation and there is a high possibility they will have to reduce services soon.
In the best scenario with the epidemic contained before April, the Civil Aviation Administration of Vietnam (CAAV) estimated that Vietnam’s airlines would transport 48 million passengers, down 9.2 percent year on year.
In the worse scenario with the epidemic put under control before June, Vietnamese carriers would transport 45.7 million passengers, down 17 percent.
To support domestic carriers, the Ministry of Transport is requesting the Government to provide aviation service fee subsidies for local airlines.
The ministry suggested cutting half of takeoff, landing and operation service fees for domestic flights from March 1 to May 31. The duration may depend on the disease’s developments.
It also proposed the Government assign the Finance Ministry to consider the exemption of import tariffs and environmental tax on aviation fuel for three months.
If that makes it difficult to balance the State budget, the ministry proposed reducing 50 percent of import tariffs and environmental tax on aviation fuel, and allowing a delay of tax and budget contributions by airlines.
In the latest developments, national flag carrier Vietnam Airlines announced the suspension of flights between Vietnam and France starting March 17 amid the worsening COVID-19 outbreak.
In addition, it has temporarily stopped flights between Vietnam and Malaysia from March 18-31 due to the Malaysian government’s border lock-down during the period.
Flight disruptions estimated to cost local airlines VND30 trillion
Aircraft are parked at Tan Son Nhat International Airport in HCMC. Local airlines will sustain an estimated VND30 trillion in lost revenue this year
Local airlines will sustain an estimated VND30 trillion in lost revenue this year, according to the Ministry of Transport. The coronavirus pandemic has led to air travel restrictions and bans worldwide.
The ministry’s latest report showed local airlines have discontinued or scaled down most flights, Thanh Nien newspaper reported.
All flights to and from China have been cut, while the number of flights to Taiwan has been slashed by 25%.
The latest forecast of the aviation industry's lost revenue is above VND10 trillion announced in early February and the VND25 trillion predicted in late February.
The Ministry of Transport proposed the Ministry of Planning and Investment report the situation to the prime minister, so it can take policy measures to back ailing local airlines. Accordingly, a 50% reduction in take-off/landing and flight operation fees may take effect from March 1 to May 31.
The Ministry of Transport also proposed the Government assign the Ministry of Finance to consider offering import tariff and environmental protection tax exemptions for jet fuel for three months so that local airlines can survive these hard times amid the coronavirus pandemic. VNA/SGT
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