Tough measures: An Airbus A321 aircraft of Bamboo Airways taxis at Noi Bai airport in Hanoi. The airline is temporarily suspending routes from Hanoi to Phu Quoc, Cam Ranh and Da Nang, as well as some of its international routes. — Reuters
HANOI: Slower recovery in international markets and lower demand in domestic air travel are hindering the recovery of Vietnam’s airline industry, say industry insiders and policymakers.
“Economic downturn, inflation and exchange rate fluctuation are all contributing factors to consumers’ tightening spending, which has resulted in lower demand in key markets including Japan, South Korea and China,” said Dinh Viet Thang, director of the Civil Aviation Authority of Vietnam (CAAV).
According to statistics from the Vietnam National Administration of Tourism, in the first nine months of 2023, air travel between Vietnam and Japan, and Vietnam and South Korea, had only recovered to 80% of pre-pandemic levels.
Meanwhile, economic slowdown and visa policies have also been significantly hindering the recovery of the Chinese market at just 17% of pre-pandemic levels.
This had a much bigger-than-expected impact on Vietnam’s airline industry as China has become one of the largest tourism markets in recent years.
In addition, according to a report by domestic airlines, the first three quarters of 2023 saw a drop in revenue generated from chartered flights to just under 10% of the same period in 2019.
This is significant since charter flight operations played an essential role in improving the airline industrys’ efficiency due to a focus on nighttime flight schedules.
Thang said that in order to compensate for the decline in traditional markets, Vietnamese airlines had been actively looking for new international routes from major hubs including Hanoi and Ho Chi Minh City (HCM City), namely to Australia and India.
While it had started to show some results, airlines said there wasn’t much potential for growth as these routes were quite saturated, at least for the short-term.
As a result, airlines have been turning their attention to the domestic market’s recovery, which produced an oversupply.
According to a recent CAAV report, supply in the last five months has increased by 15.2% compared to the same period in 2019. Demand increase has been estimated at 7.5%.
In an earlier development, Bamboo Airways temporarily suspended routes from Hanoi and HCM City to Phu Quoc, Cam Ranh and Da Nang, as well as some of its international routes to Australia and the United Kingdom. The airline is currently operating just 20 out of its 29 registered aircraft.
“We have seen the peak travel season of summer 2023 end very early. By the end of July, demand decreased significantly, unlike previous years, in which demand lasted late into August, even early September,” said a representative from a major domestic airline.
The industry will likely face additional challenges from now until the end of the year, including rising fuel prices which could increase to US$119.36 per barrel, significantly higher than most airlines’ budget estimates of US$106.86. — Viet Nam News/ANN
