HCMC – The Ministry of Planning and Investment has proposed the Government put in place special policies to eliminate the difficulties facing local air carriers due to the Covid-19 pandemic.
According to the ministry, Covid-19 has led to airlines facing a revenue plunge, a lack of money and difficulties in making payments, posing a high risk of bankruptcy, Thanh Nien Online newspaper reported.
Without prompt solutions, the entire aviation sector will be affected, thousands of laborers will lose their jobs and it will take huge resources to help the sector recover.
The ministry suggested the Government provide a guarantee for airlines’ loans, allow the State Capital Investment Corporation (SCIC) to invest in air carriers and reduce 70% of the environmental protection tax on jet fuel in 2021.
The ministry also proposed continuing to apply a minimum fee of zero Vietnam dong on specialized aviation services.
In addition, it is necessary to extend the period that take-off and landing prices as well as flight operation service fees for departures and arrivals of domestic flights are cut by half.
Dr Can Van Luc, an economic expert, added that the State should support both State-owned and private firms based on their market shares and contributions. Low-interest loans should be sourced from the State budget to be offered to air carriers.
According to the International Air Transport Association, the aviation sector will waste US$77 billion in the second half of 2020, regardless of the resumption of flights. In Vietnam, airlines lost some US$4 billion, with Vietnam Airlines alone losing some US$2 billion.
Tran Thanh Hien, head of Vietnam Airlines’ Finance and Accounting Department, said the air carrier has incurred a cash deficit of VND11.6 trillion (US$500.7 million) and the figure was forecast to surge to VND14.5-15 trillion this year. Despite the recovery of the local aviation sector, the national flag carrier’s average revenue has still plunged by half as it is focusing on a plan to stimulate domestic tourism while its international flights have yet to be resumed.
On the verge of bankruptcy, Vietnam Airlines proposed the Government provide a guarantee for its loans worth at least VND4 trillion with a preferential interest in three years. It also suggested issuing its shares for existing shareholders to raise capital and that the State would use the State budget or assign SCIC or other State-owned enterprises to buy the shares.
According to Dr Nguyen Dinh Cung, former head of the Central Institute for Economic Management, the State has created a fair business environment for air carriers and issued common support policies for them. However, the State also owns 86% of Vietnam Airlines, so it should help the airline remove obstacles to ensure its existence and development.