Vietnam’s effective containment of the Covid-19 pandemic would help boost domestic demand for air travel in 2021, in which the number of air passengers could return to the pre-Covid-19 level of 73 million this year, or an increase of 23% year-on-year.

Number of air passengers going through Vietnam's airports in 2014-20. Source: Bloomberg, SSI

SSI Securities Corporation made the prediction in its latest report on the outlook of the local aviation industry in 2021.

“The domestic market will remain a priority for the industry, at least until the end of the first half of 2021,” stated SSI’s report.

According to the SSI, the serious Covid-19 situation globally means the Vietnamese government will keep its current border closure until the second half of 2021.

“The efficiency of Covid-19 vaccine will be a decisive factor for Vietnam to ease current travel restriction and resume international flights,” stated the SSI.

Nevertheless, SSI’s report estimated the number of international passengers to Vietnam would reach 12 million in 2021, representing a 100% increase year-on-year, or 34% of the pre-Covid-19 level, and by 2022, the figure would be fully recovered when tourism activities return to normal.

Meanwhile, air cargo transportation is likely to recover in late 2021 along with resumption of international flights and airlines shifting their focus to air freight to take advantage of high transportation cost during the pandemic.

The SSI expected the volume of goods transportation to return to normal of 1.5 million tons by 2021, referring to Vietnam’s plan of importing 30 million doses of Covid-19 vaccine in 2021 from AstraZeneca, Pfizer and Sputnik V.

“The outlook of Vietnam’s domestic aviation market, however, is dependent on the government’s efforts of keeping the pandemic situation under control,” stressed the SSI, saying it will not rule out a future global outbreak.

In 2020, Vietnam’s airports handled 66 million passengers, down 43% year-on-year, in turn halting the strong growth momentum of the aviation sector with the compounded annual growth rate (CAGR) of passengers at an average of 18.3% in the past five years.