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Stopping the licensing of new airlines, restricting the expansion of fleets

Controlling the number of new airlines until the market recovers and restricting licensing to expand fleets in the immediate time are solutions proposed by the State Capital Management Commission (SCMC).

The Government has been implementing solutions to ease difficulties that airlines faced because of Covid-19, fuel price hikes and the Russia-Ukraine war. The solutions, according to economists, need to be maintained so that enterprises can have money to keep operating.

Vietnam Airlines’ finance report showed that it took a loss of VND13.337 trillion in 2021 and VND10.056 trillion in 2020. The figure was VND2.7 trillion for the first quarter in 2022.

The stockholder equity of the national flag air carrier is negative after nine consecutive quarters of taking losses. If the situation continues, it will face a forced delisting this year end.

Meanwhile, Vietjet Air reported a loss of VND3.088 trillion in 2021, VND3.134 trillion in 2020 and the accumulative 2-year loss of VND6.222 trillion.

Bamboo Airways doesn’t have to publicize its finance report, but when the carrier asked for permission to fly non-stop to the US (in 2020), it mentioned the loss of $156 million, or VND3.6 trillion.

Tran Tho Dat, former rector of National Economics University, said SBV needs to speed up the credit support package for businesses to recover and develop the aviation industry in new conditions.

According to the expert, aviation, tourism and related services should be prioritized to get preferential loans for at least 2-3 years. At the same time, it’s necessary to consider cutting some kinds of costs to mitigate the adverse impact of the fuel price increase by reducing the import tax on air fuel. 

Besides, he suggested adjusting the ceiling airfare and allowing airlines to collect fuel surcharge for domestic air routes.

Meanwhile, Nguyen Ngoc Canh, Deputy Chair of SCMC, said the Ministry of Transport needs to have the solutions to manage the size of the domestic aviation market. He believes that it’s necessary to control the number of new airlines until the market recovers, and to restricting the licensing to expand fleets in the short term until the existing airplanes are used up, so as to avoid oversupply.

In long term, the increase in number of airplanes needs to be not higher than the receiving capacity of airports and suitable to the market management capability.

Pham Thi Giang Thu from Hanoi Law University agrees that in addition to financial support to operational airlines, it’s necessary to stop the licensing of new airlines at this moment.

Regarding the debts incurred by airlines, she suggested purchasing and securitizing the debts.

Ng. Ha

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