Local air carriers have an overriding need for another bailout package from the Government as they have been struggling with the Covid-19 pandemic for a long time, according to Assoc. Prof. Dr. Nguyen Thien Tong, an aviation expert.
“The consecutive waves of the Covid-19 pandemic hit the last hope of local airlines and they are in dire need of rescue to overcome the brink of bankruptcy,” Tong told The Hanoi Times.
In the latest draft report related to the performance of local businesses submitted to the Prime Minister, the Ministry of Planning and Investment warned of the insolvency of aviation enterprises.
Vietnam Airlines, the national flag carrier, estimated its loss in the first quarter to be around VND4.8 trillion (US$209 million) and may reach VND10 trillion (US$436 million) in the first half of the year. Currently, the national airline’s overdue debt of VND6.24 trillion (US$269.4 million) could bring it to the verge of bankruptcy.
“Banks stop providing loans for Vietnam Airlines due to the slow disbursement of the Government rescue package worth VND12 trillion ($523 million),” the ministry added.
Budget carriers such as Vietjet Air and Bamboo Airways are also predicted to face more difficulties as they have used up all financial resources to keep their businesses afloat. Vietjet Air is in need of VND10 trillion (US$436 million) for sustaining its business.
The aviation industry is forecast to continue facing difficulties this year and local aviation businesses are gradually running out of financial resources to maintain operations, the ministry noted.
Tong said in addition to making aviation rescue decisions, the regulatory authorities should determine how to rescue effectively.
“We will consider assisting them in terms of finance or preferential policies. But I think the support level should be based on the tax amount they paid to the State coffers in 2019, immediately before the Covid-19 pandemic broke out in Vietnam,” he said.
“The tax amount paid by an airline to the State is the expression of that airline's role in the economy. Rescuing airlines in this regard is the most appropriate and fair thing to do," Tong said.
Dau Anh Tuan, Director General of the Legal Department under the Vietnam Chamber of Commerce and Industry (VCCI) said the support policies need to be practical and useful as well as fast-tracked.
“We shouldn’t wait for local business to be on the verge of bankruptcy to offer supporting policies,” he told The Hanoi Times.
To remove difficulties for businesses, the ministry has requested the Government, through the State Bank of Vietnam, to approve a 4% supporting interest rate on bank loans granted to airlines in the 2021-23 period.
The ministry proposed the Ministry of Transport extend the 50% discount policy on fees for services of aircraft take-off and landing, and flight control, as well as applying the minimum price of zero dong for specialized aviation services until the end of 2021.