A corner of Tân Sơn Nhất International Airport. (Source: nld.vn)Hanoi (VNS/VNA) – Vietnam’s airline industry is facing its worst crisis yetamid the COVID-19 pandemic, an online conference on financial solutions tokeep the industry afloat heard on August 2.
General Secretary of theVietnam Banks Association Nguyen Quoc Hung said the industry's rapid growth inrecent years had made air travel domestically and internationally a lot moreaccessible and affordable to the general public. Aside from the national flagcarrier, Vietnam Airlines, other companies including Vietjet Air and BambooAirways had also made great contributions to the industry's development.
The industry, however, was among the hardest-hit by the pandemic as many citiesand provinces across the country had started implementing social distancingmeasures and had placed restrictions on travel, said Hung.
After two years of struggling to cope, most if not all, companies in theindustry were experiencing great difficulty to maintain a healthy cash flow, toa point that it would be extremely difficult for companies to cover theirexpenses and they might be forced to shut down, he said.
Despite support from the Government, the fourth outbreak of the virus mightwell be the straw that breaks the camel's back. In addition, government supporthad not fully reached private companies in the industry.
Meanwhile, the lack of viable business and operation plans during the pandemichad made it near impossible for airline companies to secure desperately neededcash from banks.
Hung said as airline companies scaled back on their operations given the extremelylow demand for air travel, most banks would have to say no to their loanrequests.
"What we need right now is a legal imperative to rescue the industry. Forexample, a National Assembly resolution on the matter. Meanwhile, the Government must step up its efforts to roll out support measures,especially for privately-held companies," said Hung.
"The banking sector has the money to help. The issue here is the lack ofguidance to bring airline companies and banks together," he said.
Nguyen Khac Quoc Bao, head of HCM City University of Economics Faculty ofFinance said as there was no end in sight for the pandemic companies must bracefor further hardship down the road.
"Without ample support, companies will face liquidity risk and evenfinancial ruin. Should we leave it unaddressed, the heavy cost to restructurethe industry in the near future is expected," Bao said.
Can Van Luc, chief economist of the Bank for Investment and Development ofVietnam (BIDV) said support measures must be deployed among airline companiesin a flexible and fair-to-all manner.
"The Government should consider giving out loans to privately-heldcompanies at an interest rate of 3-4 percent lower than commercial loans for upto two years. Further cutbacks on fees and taxes on top of those included inthe Government's current support scheme for the industry should also beconsidered," Luc said.
Bui Doan Ne, Vice Chairman and General Secretary of Vietnam Aviation BusinessAssociation said the association had made a number of proposals to theGovernment on how to ease international travel restrictions including a systemof vaccine passports and shorter quarantine periods for those who havereceived two doses of COVID-19 vaccine.
"We have pleaded with the government to reduce the environment tax up to70 percent by the end of June next year on top of cutbacks on service fees touse airports and income tax for airline companies," he said.
The association has also made a request to the Ministry of Planning andInvestment and the National Assembly to consider a capital injection of up to 6 trillion VND(260 million USD) for 12 months with extensions./.
VNA
