Propose to halt the establishment of new airlines: Leaving aside the “dream” of flying

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The establishment of a new airline will not be considered until the aviation market recover in 2022.

Demand slumps sharply

According to the Ministry of Transport, the total transport market in 2020 wasestimated at 42.7 million passengers, down 46 percent compared to 2019. Vietnam's airlines have transportedabout 32.6 million passengers, down 40.7 percent compared to 2019, only equal to 54 percent of the forecast shipping volume.

By the end of 2022, the total market is expected to reach 78 million passengers, equal to 74 percent of the forecast, of which Vietnamese airlines will transport more than 57 million passengers, 75 percent of the forecastreported.

Even in abest-case scenario, the indexes of the aviation transport market in 2022 would only approach those in 2019. Currently, Vietnamese airlines operate 214 commercial aircraft, but only exploiting domestic routes and some international cargo flights with aproportion of less than 50 percent of capacity.

Under this situation, the Ministry of Transport proposed focusing on recovering the domestic and international air transport market, at the same time removing difficulties for the Vietnamese airlines. The establishment of a new airline will not be considered until the sector resumes normal operations.

The report of theCivil Aviation Authority of Vietnam shows a quite serious decline of the aviation industry in recent years. In particular, in May, the number of passengers via airports nationwide reached 2.88 million, down by 70 percentcompared to the same period in 2019. Of these, international visitors reached 78,000, down 97.6 percent, domestic visitors reached 2.8 million, down 56.6 percent.

Vietnamese airlines carried 1.47 million passengers, down 67.9 percent (domestic passengers reached 1.4 million passengers, international visitors hit71,000 passengers). Compared to April, this number increased significantly due to the positive results from COVID-19 pandemic control, but compared to the same period in 2019, this wasa huge decrease.

Difficulties for new airlines

According to Dinh Viet Thang, Director of the Civil Aviation Authority of Vietnam, the air transport industry is recovering quite quickly after social distancing measures weregradually relaxed. It is likely that in the middle of 2021, the domestic market will recover as it was in 2019. The international market is expected to recover by the end of 2021.

The Ministry of Transport's proposal to temporarily stop licensing new airlinesmade the airlines waiting for a license fall into a difficult situation. Currently, there are three airlines requesting to be granted flight permits: Airlines; Vietstar Airlines and Kite Airlines.

In early April, Deputy Prime Minister Trinh Dinh Dung signed Decision No. 457/QD-TTg approving an investment plan for Vietravel Airlines aviation project, invested by the Viet Nam Travel Airlines Co., Ltd., or Vietravel Airlines with total investment of VND700 billion. This decision also requires the Ministry of Transport to receive the opinions of the ministries, branches and related agencies in evaluating and licensing in accordance with thelaw and ability to meet capital sources of investors.

At the same time, being responsible for supervising the development of the fleet must be consistent with planning, management and supervision capacity of competent State agencies, the capacity to serve aviation infrastructure, and allocating resources of investors to promote exploitation capacity, ensuring aviation security and safety. Vietravel Airlines is expected to take off in the first half of 2021 when meeting the flight conditions and the air transport market resumes after the Covid-19 pandemic. However, if this proposal of the Ministry of Transport is adopted, Vietravel Airlines may have to temporarily postpone its flight plan despite having been approved to establish.