Aviation industry bounces back in Q2 as routes open
Passengers disembark from a Vietnam Airlines flight at Tan Son Nhat Airport in HCM City. (Photo: VNA)
According to the Civil Aviation Administration of Vietnam, in the first six months of this year, the total number of passengers in the industry reached 23.3 million, up 74.2 percent from the same period in 2021 and equal to 60% compared to the same period in 2019. The internal market welcomed 20.8 million passengers, an increase of 58.4% compared to the first six months of 2021 and an increase of 12 % compared to the same period in 2019.
Total freight transported in six months was estimated at 651,000 tonnes, up 6.8% from the same period in 2021 and up 7% from the same period in 2019, of which the domestic market accounted 146,900 tons, up 3.6% compared to the first six months of 2021 and down 29% compared to the same period in 2019.
According to the Civil Aviation Administration of Vietnam, the domestic market started to recover from April, rose again in May and saw strong growth in June. In June alone, the domestic market welcomed 5 million passengers, an increase of 20.9% compared to May and an increase of 38.8% compared to June 2019 – the peak month of summer before the COVID-19 pandemic. Seat occupancy on domestic routes in June is high, ranging from 85% to 87% depending on the airline.
Le Hong Ha, chief executive of Vietnam Airlines, told the annual general meeting of shareholders that Vietnam’s airline market will see many positive changes as the government has reopened and resumed domestic flights and international air routes. However, the international air transport market would still face many difficulties due to the complicated course of diseases, a sharp decline in the effectiveness of vaccines and high fuel prices.
Ha said the tourists traveling were mainly Vietnamese. The number of foreign customers had not been able to recover as before the pandemic. Dang Ngoc Hoa, chairman of Vietnam Airlines, cited forecasts that the global aviation market will recover by the end of 2024.
SSI Research also estimates that earnings growth for companies in the airline industry this year is expected to increase insignificantly as the recovery of international routes is expected to be slow, as key markets such as China, South Korea and the Japan have yet to fully reopen. Therefore, the profit of the whole industry is expected to increase more strongly from 2023.
The Vietnam Airlines Corporation (ACV), the unit that directly manages 22 of the 23 civilian airports in Vietnam, had an exceptional quarter. It recorded net revenue of VND3.43 trillion in the second quarter, 2.5 times higher than the same period in 2021. During which, aviation services revenue reached VND3.27 trillion , up 123% year-over-year. Financial revenue reached 1.91 trillion dong, twice as much as in the second quarter of 2021 thanks to an increase in exchange rate spreads.
During the second quarter, this unit made a net profit of VND 1.47 trillion thanks to the difference in exchange rates. Financial, general and administrative expenses decreased while selling expenses increased. ACV collected VND 2.6 trillion in after-tax profits, 7.6 times more than the same period last year.
In the first six months, ACV’s net revenue reached VND5.56 trillion, up 61.5% from the first half of 2021.
Airlines in trouble due to rising fuel prices
As of June 30, five civilian airlines in Vietnam, including Vietnam Airlines, Vietjet Air, Bamboo Airways, Pacific Airlines and Vietravel Airlines, operate nearly 60 domestic routes linking Hanoi, Da Nang and Ho Chi Minh City with 19 local airports.
Airlines are encouraging the operation of flight routes to tourist destinations such as Da Nang, Quy Nhon, Phu Quoc and Nha Trang. Generally, the frequency of operations to/from Phu Quoc currently reaches 100 domestic flights per day compared to 2019, when there were only 72 international and domestic flights per day.
However, the high price of oil is one of the main obstacles for Vietnamese airlines. As of June 30, Brent oil was trading around USD 106 per barrel, up 37.6% from the start of the year.
Vietnam Airlines (HVN) announced its second quarter business results with revenue of VND 18.3 trillion, 2.8 times higher than the same period last year. However, the cost of goods sold rose sharply to VND18.7 trillion, 3.3 times higher, resulting in a gross loss of VND377 billion for the company.
Financial business revenue reached 149.1 billion VND, up 5.4 percent from a year ago. Selling and administrative expenses increased by 111.8% and 6% respectively. In addition, financial expenditure amounted to VND 1.15 trillion, 2.7 times higher than the same period last year. As a result, Vietnam Airlines suffered an after-tax loss of VND 2.6 trillion, down from the loss of VND 4.53 trillion in the second quarter of 2021.
At this year’s annual general meeting of shareholders, Tran Thanh Hien, chief accountant, explained that although this year the government has completely opened up the air routes, the price of kerosene has increased, as have fuel costs. operation./.