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Aviation in a spin at economic downturn
The decline in passenger numbers and subsequently profits are hitting airlines that operate in Vietnam hard during the on-going global economic crisis.
The national flag carrier Vietnam Airlines, which holds the biggest market share in the country, is also suffering the most as its passenger numbers dropped by 3.3 percent in the first quarter of this year and are expected to obtain a yearly increase of only 4.9 percent as compared with 15.8 percent recorded in 2008.
Jetstar Pacific, meanwhile, still kept a high pace of growth, at 28.7 percent, in the first quarter, but much lower than the 54.6 percent in 2008.
According to the latest news from the General Statistics Office, the number of air passengers in the first four months of the year was only 3.5 million, a drop of 3.2 percent year-on-year and the number of foreign visitors to Vietnam fell sharply by 10 percent. Air cargo services also saw a drop of 11 percent during the same period.
In addition, the industry has received a double blow from the A/H1N1 flu, which is also a global threat.
A series of solutions have been drawn up to help the aviation industry to weather the storm. At a seminar held in Hanoi on May 20, Dang Ngoc Minh, Vice Head of the Tax Policy Department of the Finance Ministry, said that aviation businesses will enjoy income tax reductions and delays and preferential tax levels for importing equipment and new technologies.
The import taxes levied on fuels were reduced several times earlier this year from 40 percent to 20 percent to follow the fluctuations in the global price of aviation fuel.
In April, the Government ratified a project to build and upgrade 10 airports to international standards and gave Vietnam Airlines permission to purchase an additional 32 Airbus aircraft, 16 Boeings and 11 ATR72’s, as well as leasing more planes in order to increase its fleet to 100 by 2014.
According to Lai Xuan Thanh, Vice Head of the Civil Aviation Administration of Vietnam (CAAV), in order to ensure sustainable development in the industry, the government should focus more investment on developing technical staff and stop licensing new aviation businesses until 2015.
Thanh said the country’s aviation industry is dependent on many outside factors, especially from those who set its service costs. He pointed out that 30 percent of Vietnam Airlines pilots are foreigners, while for Jetstar and Indochina Airlines the rate rockets up to 99 percent and 100 percent, respectively.
Hence, the administration has proposed building a centre for pilot training in Cam Ranh in central Khanh Hoa province and an aircraft maintenance centre at Chu Lai Airport. They also plan to produce aviation fuel at the Dung Quat refinery.
Besides technical and personnel solutions, the CAAV official also stressed on the need to increase competition in the market and remove any from of monopoly.
According to the CAAV, Vietnam has five airlines and 43 foreign airlines that fly to and from Vietnam. The country has 24 airports, including 3 international ones.
In 2008, the industry handled over 23 million passengers and nearly 437,000 tonnes of cargo transported via local airports, the sixth biggest in the ASEAN block.
It aims to jump to fourth place with 29 million passengers by 2010 and 47 million passengers by 2015.
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