Revenue on the rise, but airlines facing tough times ahead

High oil prices and tough competition from foreign carriers, on the other hand, are major worries for local carriers.

Vietnam welcomed 8.9 million foreign arrivals from January to September, up 4.75 times from the previous year, with over 6.1 million arriving by air, a 3.7-fold increase. 

The tourism sector is bouncing back, leading to robust business results for domestic airlines. Vietnam Airlines' turnover in Q3 rose 11.7% YoY to over 23.75 trillion VND (981.6 million USD), marking an eight-quarter recovery.

From January to September, the business made almost 68.1 trillion VND, which is 32.5% more than the same time last year. At the same time, it lost more than 3.5 trillion VND, which was half of what it lost at the same time last year.

The Vietnam Airlines Group, which includes Vietnam Airlines, Pacific Airlines, and Vasco, flew more than 114,000 times and carried more than 18 million people during that time, according to the Civil Aviation Authority of Vietnam (CAAV).

Vietjet Air's income went up by 25% in the third quarter, but the company is still facing big problems. 

Meanwhile, Bamboo Airways continued to adjust its flights for the end-of-year period, suspending a number of international flights from Hanoi and Ho Chi Minh City in order to overcome the difficult conditions.

After a good rebound, local airlines still haven't been able to make money because ticket prices haven't been able to keep up with costs. 

In June, VN Airlines Group's domestic ticket sales were 6.6% lower than in June 2019 (before the COVID-19 pandemic). 

Vietnam Airlines said that the maximum price of airfare has stayed the same since 2015, but the costs of things like fuel and exchange rates have changed, which has hurt the airline's business.

Vietnam Airlines' fuel spending increased 30.5% in 2022, despite average fuel prices rising 85%. The airline incurs 70% of costs in foreign currencies, including VND, JPY, and KRW, which are all falling against USD. This has led to a 4.35% increase in spending. The USD/VND rate rose 6.6% from 21,900 VND in 2015 to 23,350 VND 2022, affecting business performance.

The aviation sector requires support from the government, relevant ministries, sectors, and the supply chain of both tourism and aviation sectors for better performance.

In the long run, experts say that the price cap that was put on local routes needs to be lifted so that planes can make more money. But the law on prices and the law on civil aircraft need to be changed in order for the removal to happen, which could take a long time. Soon, problems should be fixed so that planes can stay in business until the end of 2024, when the market is fully recovered.

Source: Vietnamplus