International flights are not as expected, airlines face financial difficulties

Department Air According to Vietnam Airlines, currently, fuel costs account for about 30%-42% of total flight costs of airlines. The leader of an airline admitted that the current high fuel price brought many disadvantages to the entire transportation industry in general when it was on the way to recovering from the Covid-19 epidemic.

Compared to the last “freeze” period, international flights have grown quite strongly, but are still far from reaching the level before the Covid-19 epidemic. Photo: Noi Bai International Airport Terminal

“If fuel prices continue to maintain or increase, the revenue of the airline as well as other airlines will not be able to cover the cost of jet fuel, let alone other fixed costs. This will once again cause problems. weighting the flight wings of Vietnamese and international airlines in the period when the tourism and aviation industry has just prepared for slow recovery steps in early 2022 “- a representative of this airline assessed.

According to preliminary calculations of this airline, if the price of jet fuel remains at 130 USD/barrel for the whole year of 2022, the estimated cost will increase by 5,700 billion VND; If it goes up to about USD 160/barrel, the cost will increase to VND 9,120 billion, exacerbating the expected loss in 2022.

If fuel prices continue to “climb” in the near future, it will push airlines into a particularly difficult situation, while the ongoing tense war in Russia-Ukraine will also have a profound impact. comprehensive and negative to the economy.

In addition, many airlines have to change their routes to avoid the airspace of these two countries to ensure safe operation, which costs more distance, time and money.

Specifically, according to calculations from the Civil Aviation Administration of Vietnam, flights to/from Europe must change routes to avoid Russia via China, Kazakhstan or via North Africa. Flight time is expected to increase from 60 minutes flight to 120 minutes/flight, resulting in additional costs from about 10,600 USD/flight to 21,200 USD/flight. Flights to/from the US must adjust their flight routes to avoid Russian airspace, extending the flight time from 20-30 minutes/flight, incurring an additional $5,000-10,000/flight depending on each phase.

In addition, a large number of tourists from Russia, Europe, and the United States to Vietnam have also been reduced due to domestic costs being pushed up, which has affected the pocket and upset the plan. to our country.

According to the Civil Aviation Administration of Vietnam, by the end of 2022, the international market will need a long time to recover, the volume of international passenger transport will decrease by 72-80% compared to 2019.

Therefore, the business activities of airlines in 2022 will continue to face difficulties, the risk of negative equity, running out of cash flow is still close due to the proportion of revenue and profit of the main airlines. mainly from the international shipping market.

In order to minimize losses, Vietnamese airlines have been researching and implementing flexible operating plans that adapt to the actual situation to both save costs and reduce risks, on the other hand. capital preservation.

The airlines proposed the State Bank to speed up the credit support package for aviation businesses with the interest rate of 0% or preferential interest rates with a long-term repayment period of 3-5 years; exempting corporate income tax for 2022, reducing VAT to 5% to stimulate the market; reducing the import tax on aviation fuel to 0% (currently 7%); air service price support…

In order to continue to support airlines to overcome the difficult period, creating a premise for the recovery and development in the future, in a recent document, the Civil Aviation Administration of Vietnam proposed the Ministry of Transport to continue. promulgate a policy of 50% discount on landing and take-off services for domestic flights from January 1, 2022 to the end of December 31, 2022 and apply a minimum price of 0 VND for services. specialized aviation services on the list of State-prescribed price brackets from January 1, 2022 to the end of December 31, 2022.

Currently, airlines are still trying to restructure, proactively deploying many solutions in management and administration to cope with the impact of the Covid-19 pandemic, fuel prices, revenue loss from the market, etc. international markets to ensure liquidity and continuity of operations.

According to Duong Ngoc