VIETNAM NATIONAL UNIVERSITY, HANOI

UNIVERSITY OF LANGUAGES AND INTERNATIONAL STUDIES

____*******____

ENGLISH FOR ECONOMICS

FINAL REPORT
The impact of COVID-19 on the demand, supply, and market
price of the aviation sector in Vietnam.

Student’s name: Le Thi Thao Van

Student ID: 18061276
Class: BK - ENG 3072 - 01.

Hanoi, 2022.
 Table of Contents

Abstract ........................................................................................................................... 1

1. Introduction ................................................................................................................ 1

2. Conceptual background ............................................................................................ 3

2.1. Aviation ............................................................................................................................. 3

2.2. The role of aviation in economic development ................................................................. 3

2.3. Demand factors................................................................................................................. 4

2.4. Supply factors ................................................................................................................... 5

3. Analysis ....................................................................................................................... 6

3.1. Impacts of Covid - 19 on the demand side........................................................................ 6

3.2. Impacts of Covid - 19 on the supply side .......................................................................... 8

3.3. Impacts of Covid - 19 on price fluctuations ................................................................... 10

3.4. Impacts of Covid - 19 on revenues ................................................................................. 12

4. Recommendation...................................................................................................... 14

4.1. Vietnam’s aviation development target .......................................................................... 14

4.2. Solutions to restore and develop Vietnam's aviation...................................................... 15

5. Conclusion ................................................................................................................ 20

Reference list ................................................................................................................ 21

Abstract
Since the end of 2019, the SARS-CoV-2 strain has become a horrible obsession
of the whole world because it has swiftly expanded throughout population
communities and devastated practically every element of not only the economy but
also social life. For economies, the Covid-19 pandemic has caused difficulties for all
actors involved in the economy, from large corporations to enterprises, and affects
the employees directly involved in the production and business processes of
enterprises. The aviation sector is expected to be one of the businesses most affected
by this epidemic. The objective of this study is to analyze the damage after many
waves of COVID-19 on the demand, supply, and market price of the aviation sector
in Vietnam. In general, the COVID-19 pandemic’s impact on the aviation industry
in Vietnam is a big concern, which may require a timely economic policy response
and financial scheme to better support aviation enterprises in coping with the
challenges during post-pandemic recovery.
Key words: Vietnam's Aviation, Covid - 19, demand, supply, market price.

1. Introduction
Vietnam is the world’s seventh fastest-growing aviation market. Aviation
generates huge revenue for destinations and contributes to overall economic
development for a plethora of countries, especially the nations dependent on
international trade. In other words, there is a strong link between aviation industry
development and economic growth, which also stimulates the development of other
related businesses and sectors in a country. However, aviation is a vulnerable
industry that may crash due to potential risks such as global pandemics (Shakya
2009).
In the service sector, there are many affected industries in the first group,
which is the aviation industry, whose estimated influence rate is 100% (GSO, 2020).
A report by the International Civil Aviation Organization (ICAO) showed that global
air passenger numbers will drop by 68% in 2020 due to countries closing borders and
restricting travel. Only 1.8 billion passengers chose to travel by plane, compared with
4.5 billion in 2019. The number of flights dropped sharply in March and April 2020.
According to IATA, the global airline industry's passenger transport activity in
September 2020 fell 72.8% year-on-year.
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Figure 1: Number of commercial flights globally from January to December (2018 – 2020)
(Source: General Statistics Office)

In Vietnam, the COVID-19 pandemic and its impact on the aviation industry
are major concerns due to multiple lockdowns imposed since 2020. Aviation
activities in Vietnam in general particularly fell into a state of crisis and almost total
paralysis until March 2021. Most of the services and activities associated with
transportation, domestic and foreign transportation were stopped or interrupted,
which led to devastating consequences, including a loss of revenue for the aviation
industry and a loss of jobs for workers. From June 2020, the domestic tourism
industry started to recover; however, with the impact of the next waves of COVID-
19, the situation once again became a struggle, with a difficult economic recovery
from the pandemic anticipated. The Civil Aviation Administration of Vietnam
(CAAV), the agency under the Ministry of Transport (MOT) that regulates the
aviation industry, provided that the number of air passengers in Vietnam likely
dropped by 46% to 43 million and Vietnamese carriers lost more than $1.3 billion or
worse in revenues.
This report aims to also approach different research directions and methods to
analyze the influence of the Covid-19 pandemic on the aviation sector in Vietnam,
recognize the challenge they are facing in aviation, and identify strategies to
overcome short and long-term challenges.

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2. Conceptual background
2.1. Aviation
According to research by Edwin D. Phillips and Robert W. Kaps (2005),
aviation is defined as the knowledge and practice related to the use of an airborne
vehicle for commercial, research, military or charity in the earth's atmosphere.
Aviation is a transport economic field that applies modern and high-tech techniques
with highly international activities, associated with safety and security, forcing
synchronous operations in a tight process.
2.2. The role of aviation in economic development
There is no denying that the aviation industry is the engine of economic
development. One of the main reasons for this importance is the globalized nature of
the industry, helping to connect different continents, countries, and cultures. As a
result, global aviation has been key in facilitating efficient travel to distant places,
enriching many lives in the process. As a driving force for socio-economic
development, the growth of the regional aviation industry plays an essential role in
the markets and locally in which it operates. Regional aviation will not only improve
connectivity between major cities to Vietnam's lower-density locations but also
promote Vietnam's international connectivity to regional and global destinations. The
key point of the aviation industry in economic growth and its limitless potential is
evident in the industry's achievements before the COVID-19 pandemic.
The aviation industry has also been a key contributor to global economic
prosperity, not only as a result of the tourism industry boosting local economies but
also because it has allowed for improvements in global trade. The aviation industry
plays an important role in driving the growth of the tourism industry, especially in
developing countries. Aviation carries 2 billion passengers a year, 40% of
international tourists now travel by air. The air transport industry creates a total of 29
million jobs globally. 70% of businesses reported that using airline services is
inevitable to serve a large market. Air travel accounts for 10% of total trade revenue,
generate a significant source of foreign currency revenue, and has a relatively good
impact on the economic situation of countries.
Domestic and international trade activities are being promoted to expand
according to the trend of globalization, leading to the growth of the air transport
system, specifically accounting for 40% of inter-regional goods export turnover. The

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impact of aviation on the global economy is estimated at $2,960 billion, equivalent
to 8% of the world's GDP.
The International Air Transport Association (IATA) showed that the air
transport industry including airlines and supply chains contributes an estimated $2.6
billion to Vietnam's GDP. Spending by international visitors contributed an
additional $9.9 billion, bringing the total to $12.5 billion. Revenues from the air
transport sector and international visitors arriving by air accounted for a total of 5.2%
of the country's GDP.
According to the IATA report, the air transport industry has supported 2.2
million jobs. Airlines, airport operators, airport businesses (restaurants and retailers),
aircraft manufacturers, and flight assurance service providers employ 42,000 people
in Vietnam. In addition, by purchasing products and services from local suppliers,
the industry has also supported an additional 174,000 jobs. Furthermore, the aviation
industry is estimated to support an additional 182,000 jobs through employee wages.
As a result, part or all of these wages will be spent on consumer goods and services.
International visitors to Vietnam by air are estimated to support an additional 1.8
million jobs through expenditures that contribute to the local economy.
This sector will play an important role in creating economic value by creating
high-value and skill-demanding job opportunities, thereby contributing to the growth
of the economy in our country. With its major contribution to the economy, the
aviation industry is the catalyst of sectors including (but not limited to) commerce,
tourism, and social development. Thanks to the positive impact of the aviation sector,
other industries will also see a long-term productivity boost.
2.3. Demand factors
Economists use the term demand to refer to the quantity of a good or service
that consumers are willing and able to buy at different prices in a given time,
assuming other things are constant.
In this relationship, price means what a buyer pays for a unit of the specific
good or service, also called the independent variable. Quantity demanded is the total
number of units purchased at the price - is the dependent variable. Assuming all other
things are constant, the quantity of a good or service demanded in a given period of
time will increase when the price falls and conversely, will decrease when the price
increases. Here are some typical factors affecting demand:
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 First, the price of goods and services affects the quantity demanded according
to the law of demand. When the price of goods and services increases, the quantity
demanded of goods and services decreases and vice versa.
The second factor is the price of related goods. Two groups of related goods
affect the quantity demanded of the goods under study: substitutes and complements.
The next factor is consumer income. According to Engel's law, consumers will
have different conceptions of the same good with different income levels. Engel
divides goods into two categories: (i) Goods for which, as income increases, the
quantity demanded of the good increases; When income falls, the quantity demanded
of a good is called a normal good. (ii) Commodities when income increases, the
quantity demanded of goods decreases; When income falls, the quantity demanded
of a good increase is called a secondary good.
Moreover, the taste is the preference or interest of a group of people about
certain goods and services that affect consumer psychology. Taste determines the
type of goods that consumers want to buy.
Besides, the number of buyers reflects the size of the market. The more
consumers in the market, the greater the demand for goods and services. The fewer
consumers in the market, the smaller the demand for goods and services.
2.4. Supply factors
Supply is the quantity of a good/service that sellers are able and willing to sell
at different prices in a given period of time assuming other things constant (ceteris
paribus). Meanwhile, quantity supply reflects the quantity of a good or service that
sellers are willing and able to sell at different prices during a given period of time,
assuming other things remain constant. Some factors that affect supply, including:
The price of goods and services affects the quantity supplied according to the
law of supply. When the price of goods and services increases, producers will
produce more goods to put on the market to earn more profit and vice versa.
The prices of products directly affect the cost of production and thus the
quantity of a good that producers are willing to sell.
Government policies such as legal policy, tax policy, and subsidy policy all
have a strong impact on the quantity supplied. When government policy favors

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producers, producers are encouraged to produce, causing the quantity supplied to
increase and the supply curve to shift to the right and vice versa.
The number of sellers has a direct effect on the number of goods sold in the
market. When there are more sellers, the quantity supplied increases, causing the
supply curve to shift to the right and vice versa.

3. Analysis
Before the pandemic happened, Vietnam's aviation market was considered a
"gold" market. The Civil Aviation Administration of Vietnam shows that the air
transport market continuously has high growth, with an average growth rate of 20.5%
in passengers and 13.2% in cargo (period 2014 - 2018). In 2019, the growth rate will
continue to be maintained at double digits with a growth rate of 11.8% in passengers
and 3% in cargo compared to 2018. Total passenger transport reached 78.3 million
passengers and freight reached more than 1.25 million. Not only the growth in
tourists, but Vietnam's aviation also increased by 11% compared to 2018 in terms of
goods (1.5 million tons). According to the International Air Transport Association
(IATA), Vietnam is recognized as one of the fastest growing aviation markets in the
world and the fastest in Southeast Asia with an average growth rate of 15.8%/year.
It is expected to achieve an average growth rate of over 10% in the next 5 years and
reach 150 million passengers transported by 2035.
The COVID-19 pandemic is having an enormous impact on the aviation
industry, affecting passenger traffic, air cargo demand, price fluctuations, and
incoming revenues.
3.1. Impacts of Covid - 19 on the demand side
The order to restrict flights, social distance, and social isolation to prevent the
spread of the COVID-19 epidemic has caused many international and domestic
flights to close. The aviation industry is one of the industries that have suffered the
most damage under the impact of the Covid-19 pandemic, the volume of air transport
has continuously decreased deeply, specifically compared to the same period in 2019;
Domestic visitors decreased by 24%, leading to many negative impacts on the
production and business activities of enterprises in the industry. In the first 9 months
of 2020, the number of passengers transported by air only reached 22.5 million
passengers, decreasing 45.5%, and rotated 25.4 billion passengers, down 55.9%;

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freight transportation reached 196.6 thousand tons, decreasing 39.4% and 2.6 billion
tons, decreasing 54.2%.

Figure 2: Air passenger transport in the months of 2019 and 2020

(Thousand passengers) (Source: General Statistics Office)

Specifically, according to the General Statistics Office, international visitors

to Vietnam in the first 10 months of 2020, were estimated at more than 3.8 million
arrivals, down 73.8% over the same period last year. Statistics of the National
Administration of Tourism show that in the first 10 months of 2020, domestic
tourists reached 42.5 million (down 41% over the same period in 2019). After ceasing
international and domestic flights at the end of March, the number of passengers in
April decreased by 88%, and in May, the number of passengers dropped sharply by
91%. With the reopening of domestic routes from April 23, 2020, the number of
passengers has gradually improved, however, until July 28, passenger flights to/from
Da Nang were requested to be temporarily suspended exploitation (due to the
appearance of a new positive case in Da Nang) has reduced the number of passengers
in transit.
From September 8th, flights to/from Da Nang will be opened, and the number
of passengers will gradually increase, but still at a very low level compared to the
same period last year due to international flights (accounting for about 60% of the
total number of passengers rotated transfers of Vietnamese airlines in 2019) have not
yet been reopened. With the complicated development of the epidemic, domestic and
international arrivals fluctuated greatly.

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 According to the Ministry of Transport, in 2020, the volume of goods through
Vietnam's airports is estimated at 1.3 million tons, down 15.6 %. The reason is due
to the trade situation, the fluctuating supply and demand of goods due to the COVID-
19 epidemic, and the restriction of air transport activities to prevent the spread of the
disease.

Figure 3: Vietnam's air cargo volume in the period 2009-2020.

(Source: Ministry of Transport)

This is the first negative growth since 2009, but lower than the sharp decline
of the transportation and passenger services segments. The cargo terminal service
segment is least affected by the COVID-19 epidemic as cargo planes are still
maintained to ensure the supply of goods and maintain production and business
activities in the world. Accordingly, in the first 9 months of 2020 net revenue of the
cargo terminal segment decreased by 8.2% due to the decrease in cargo volume due
to the COVID-19 epidemic.
Gross profit margin decreased compared to previous years because businesses
had policies to support airlines such as supporting cargo storage fees for delayed,
canceled flights and other related activities.
3.2. Impacts of Covid - 19 on the supply side
At that time when the Covid epidemic was the most complicated and dangerous,
the price of services in the aviation sector dropped to the bottom. As a result, airlines
were forced to close many routes and reduce the number of domestic and
international flights. In the first 10 months of 2020, according to data from CAAV,

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the total number of flight transfers made by airlines was 185,870 flights, down 30.5%
over the same period in 2019. The strongest decrease belonged to Jetstar Pacific with
13,711 flights, down 54%. Vietnam Airlines and VietJet Air also decreased by 24.7%
and 39.1%, respectively. In contrast, Bamboo Airways is the only airline with a
growth in the number of flights with 21,339 flights, up 48% over the same period in
2019.

Figure 4: Number of flights by Vietnamese airlines in the first 10 months of 2019 and 2020
(Source: Civil Aviation Authority of Vietnam)

Besides, the market share of airlines also changed significantly. Specifically,

Vietnam Airlines has surpassed VietJet Air to return to the leading position in the
aviation industry with 39.6% market share, up 3.1 percentage points over the same
period last year. Meanwhile, VietJet Air only accounts for 37.6% of the aviation
market share, down 5.3 percentage points over the same period. Besides, Bamboo
Airways continues to show strong growth in the business when increasing its market
share to 6.1 percentage points over the same period in 2019 and reaching 11.5%
market share, becoming the second largest airline on the market.
According to the Airports Corporation of Vietnam (ACV), in May 2021, the
total number of takeoffs and landings at Noi Bai and Tan Son Nhat airports dropped
to a record low. On May 23, Tan Son Nhat airport had 173 flights; Noi Bai airport
had 101 flights - while on May 26, Tan Son Nhat only had 122 flights and Noi Bai
airport only had 92 flights.

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 The data shows that the pandemic had a substantial negative impact on flight
volumes for a prolonged period; this had a massive knock-on effect on global
business and travel and tourism.
3.3. Impacts of Covid - 19 on price fluctuations
After 4 waves of epidemics with serious impacts on the economy and social
life, the price situation in the aviation industry also experienced unpredictable
fluctuations. The number of passengers passing through the airports has dropped to
a record level, and airfares have also hit the bottom for many months in the context
of the complicated developments of the Covid-19 epidemic in many localities.
The system of many airlines such as Vietjet, Vietnam Airlines, Bamboo,
Pacific Airlines and Vietravel Airlines has recorded the cheapest fares for the Ho Chi
Minh City - Hanoi tours departing in early June 2021. Some airlines sell tickets
including taxes and fees of less than 500,000 VND/way; Popular prices include taxes
and fees from about 450,000 - 800,000 VND/way.
For example, at Vietjet, a series of tickets priced at 49,000 VND/way are open
for sale for the whole trip between Ho Chi Minh City and Hanoi, excluding taxes and
fees. Starting in June is also very cheap, from only 450,000 VND/trip including taxes
and fees.

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 Figure 5. Vietjet Air ticket price list in August and September 2021.
(Source: Vietjet.net)

At that time, Vietnam Airlines opened the sale of preferential tickets on most
domestic routes with unprecedented prices, from only 39,000 VND (equivalent to
613,000 VND including taxes and fees) for short flights and 99,000 VND (equivalent
to VND 613,000). equivalent to 679,000 VND including taxes and fees) for a long
flight.
Pacific Airlines also sells air tickets for only 9,000 VND/way (equivalent to
580,000 VND including taxes and fees) throughout its domestic flight network. The
program applies to tickets purchased and departed from now until June 30. In general,
airfares on the routes between Ho Chi Minh City to Hanoi, Da Nang and Phu Quoc...
have fallen sharply compared to the previous period and almost bottomed for many
months.
To protect people's health, the Government has implemented policies to restrict
entry and close borders between countries to prevent the maximum spread of

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Coronavirus. Due to the increasingly complicated epidemic situation, many airlines
have to announce that they will suspend some international and domestic routes.
They offer policies to support customers through ticket refunds and flexible flight
changes according to the epidemic situation.
3.4. Impacts of Covid - 19 on revenues
The severe effects of the COVID-19 pandemic are also reflected in the
business results of airlines and air service businesses. According to IATA, the Covid-
19 pandemic caused aviation industry revenue to drop by 80% in the first half of
2020, while still having to cover costs related to crew, maintenance, fuel, airport fees,
and aircraft maintenance.
The International Air Transport Association (IATA) forecasts that the world
passenger volume in 2021 will only be 33% compared to 2019. The loss of airlines
is estimated to reach 95 billion USD, nearly double compared to the forecast in
December 2020. The speed of recovery depends on how successful countries are in
deploying COVID - 19 vaccines. Bui Doan Ne, Vice President cum General
Secretary of VABA showed that due to the heavy impact of the COVID-19 epidemic
in 2020, Vietnamese airlines have suffered a loss of over 18,000 billion VND from
transportation activities and revenue decreased by about 100,000 billion VND
compared to 2019.
The financial report for the third quarter of 2020 showed that Vietnam
Airlines' net revenue from sales and service providers continued to decline sharply,
equaling 1⁄4 compared to the same period in 2019. Gross profit recorded a loss of
3,200 billion VND, in the same period last year, the profit was equivalent to 3,300
billion VND. After deducting expenses, Vietnam Airlines recorded a loss of 3,942
billion VND in the same period in 2019 and recorded a profit of 1,506 billion VND.
In the 9 months of 2020, Vietnam Airlines recorded a loss of 10,504 billion VND.
Total revenue and other income in the third quarter of 2020 of the parent company
decreased by 66%, of which domestic passenger revenue decreased by 34,8%, and
international revenue dropped sharply by 95.4%. In addition, subsidiaries related to
providing aviation services also saw a sharp drop in profits such as Vacs, Vigas.
VietJet Air had to face the industry's general difficulties when it also
announced less satisfactory business results in the first 9 months of 2020 with a loss

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after tax of 971 billion VND. Airline service businesses are also not immune to losses
or reduced profits.
However, the situation still has more optimistic signals than airlines.
Specifically, Noi Bai Aviation Catering JSC (NCS) lost 26 billion VND, Taseco
Aviation Services JSC (AST) lost 32 billion VND, Cam Ranh International Airport
Services JSC (CIA) lost 10 billion VND, and JSC Airport Services Da Nang (MAS)
lost 5 billion VND. These are all units facing difficulties throughout 2020, some
providing direct services to flight passengers, others operating at local airports when
the number of international arrivals nears zero. Airports Corporation of Vietnam
(ACV), which manages and operates 20 airports across the country, recorded a profit
of 156 billion VND, down 94% over the same period. Saigon Ground Services Joint
Stock Company (SGN) also decreased at the same rate, making a profit of only 7
billion VND.

Figure 6: Profits of airlines in the first 9 months of 2020 (billion VND)

(Source: FiinPro)

The least affected by the pandemic hit are businesses providing cargo services
at airports because they are typically not affected as badly as passenger transport.
Profit before tax of Noi Bai Commodity Services Joint Stock Company (NCT) in the
third quarter of 2020 reached VND 69 billion, down 8%; while Saigon Cargo
Services JSC (SCS) reached 124 billion VND, down 9%. Relatively severely affected
groups include Tan Son Nhat Airport Services Joint Stock Company (SAS) and ASG
Group Joint Stock Company (ASG) which lost 50-60% of their profit in the third
quarter of 2020.

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 In general, 2020 and the first half of 2021 are difficult years for Vietnam's
aviation industry. Vietnam's aviation industry experienced a period of explosive
growth from 2013 to 2016. However, 2020 is also the first year to witness a decline
in Vietnam's aviation industry since Vietnam's integration into the world economy.
The recovery and re-development of the aviation industry still depend heavily on the
epidemic situation, the speed of vaccination, and the plans and policies of enterprises
and the government.

4. Recommendation
In 2019, the international aviation industry is one of the main driving forces
for the world's development, connecting countries, and territories because this
industry created 87,7 million jobs, contributing 4,1% of global GDP. In Vietnam, the
aviation industry plays a connecting role between our country and the world, directly
promoting tourism development, to which the tourism industry contributes 8,8% of
the country's GDP. To recover the aviation industry, Vietnam needs to take
appropriate measures based on the solutions that the world aviation industry is
effectively implementing.
4.1. Vietnam’s aviation development target
It is because of the specific nature that the aviation industry is hardest hit by
the shutdown of globalization due to the travel restrictions caused by the COVID-19
pandemic. However, the industry is forecast to be the first and fastest to recover from
the crisis because of its importance to economies around the world. Therefore,
experts say that the aviation industry must be completely ready when the pandemic
is over.
Airports Corporation of Vietnam (ACV) determines specific tasks in the
period 2021 to 2025:
Firstly, production and business targets: Based on the situation that the covid-
19 epidemic in the world is brought under control and control in 2021, the average
annual growth rate will reach: 11-13%/year Passenger service output; 12 - 15%/year
Output serving goods; 10 - 12%/year; Number of landings and take - offs; 13 -
15%/year of revenue; 18 - 20%/year Profit before tax.

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 Secondly, the plan for investment development, management, and operation:
By 2025, ensure new investment, upgrade, expand, effectively manage and exploit
23 airports with a designed capacity of 173 million passengers/ year.
With a population of about 100 million people and one of the fastest growing
economies in Southeast Asia, Vietnam needs to increase the capacity of its aviation
industry to meet its planned air transport demand, in line with the country's projected
economic growth of 6,4% between 2021 and 2030.
Despite continuing to be affected by the COVID-19 pandemic, the aviation
industry began to show signs of recovery by the end of 2021 thanks to a nationwide
vaccination program and strict prevention regulations. The fight against COVID-19
is strictly implemented to ensure safe operation and protect the health of passengers
and crew. From the above positive signals, IATA forecasts that in 2022, the domestic
aviation market will recover about 93%. The plan to recover the domestic market in
Vietnam is 96%, higher than the average forecast. The International Air Transport
Association (IATA) reported that just released in early March 2022, the aviation
market will fully recover with the total number of passengers expected to reach 4
billion by 2024, surpassing the period before the COVID-19 outbreak.
According to the assessment of the leader of the Civil Aviation Authority of
Vietnam, the Government has decided to reopen international commercial routes
from February 15 to restore trade and tourism and reopen tourism from March 15,
2022. In addition, the gradual loosening of COVID-19 prevention and control has
created favorable conditions for international passenger transport to be smooth and
domestic passenger transport to be restored, contributing to an increase in output.
international passenger and cargo transportation in the first quarter of 2022.
4.2. Solutions to restore and develop Vietnam's aviation
• The direction and support of the Government and Departments
Firstly, due to business stagnation, the biggest and most serious problem that
airline businesses are facing during this period is financial problems. The
Government should develop specific policies to remove difficulties for the aviation
industry and review, and properly handle the law on discounts, fees, charges, and
expenses of the aviation industry. In addition, to save the aviation industry from this
burden, in addition to providing relief packages, the state should implement policies
to exempt or reduce import tax, environmental protection tax on jet fuel, reduce or
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suspend corporate income tax, personal income tax, foreign contractor tax for
transactions taking place during the epidemic period.
The Government needs to direct the Ministry of Transport to allow the
extension of the time to reduce 50% of the fees for take-off and landing services and
flight control services along with the time to apply the minimum price of 0 VND for
services, specialized aviation services on the list of state-specified price brackets
until the end of 2021.
The Ministry of Planning and Investment believes that the Ministry of Finance
needs to amend Decision No. 87 on margin trading conditions to allow airlines and
businesses directly affected by COVID-19. Accordingly, these businesses will not be
cut off from margin trading when their profits are negative for two consecutive
quarters.
Currently, the Government has solutions to support businesses such as
exemption and reduction of some taxes and fees. The State Bank also promptly issued
directives for commercial banks to develop supporting policies enterprises,
restructuring debt sources and reducing loan interest. These policies are put in place
to ensure cash flow to maintain production recovery and restore services.
Actively responding to the policy of the Government and the State Bank of
Vietnam (SBV), to support the business community to overcome difficulties caused
by the Covid-19 pandemic, recently, Saigon - Hanoi Bank (SHB) was one of three
commercial banks to sponsor Vietnam Airlines Corporation – Vietnam Airlines with
a total credit limit of 4,000 billion VND. This is one of the specific and practical
actions that SHB has continuously implemented since the outbreak of the epidemic,
to stand together with customers and the community to cope with difficulties.
Accordingly, three banks including Saigon – Hanoi Bank (SHB), Southeast Asia
Bank (SeaBank), and Maritime Bank (MSB) pledged to finance loans for Vietnam
Airlines with a total amount of 4,000 billion VND from the refinancing source of the
State Bank, in which, SHB sponsored a credit limit package of 1,000 billion VND.
The most important thing is that firms need to get low-interest loans, followed
by tax and fee exemptions and reductions. The Ministry of Planning and Investment
is also drafting a document to propose the Prime Minister direct the State Bank to
study and submit to the Government for promulgation a mechanism to support
interest rates of about 4% for credit loans in 2021 - 2023 for financial institutions.
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Airlines to help private airlines settle liquidity, and maintain resources to operate and
develop after the Covid-19 epidemic.
Secondly, as soon as the epidemic situation is under control and domestic and
international flights are reopened, departments should step up the implementation of
national tourism promotion activities. In particular, the focus should be on
coordinating with professional associations in tourism to develop and implement a
program to stimulate domestic tourism, strengthen communication and promote new
products to attract international tourists, focusing on strongly developing domestic
tourism in regions and regions of the country. Vietnam needs to strengthen
communication about safe tourism and a friendly and responsible national image
associated with positive results in COVID-19 prevention and control, which is highly
appreciated by international organizations and communities.
Thirdly, the Government needs to promote vaccination and vaccine passport
issuance. Currently, compared to other countries, Vietnam has a low vaccination rate.
Right in Southeast Asia, as of June 9, 2021, Vietnam is the last country in the process
of vaccination against COVID-19.

Figure 7: Vaccination rate chart in Southeast Asian countries (%)

(Source: VNVC)

Therefore, the Government as well as the Ministry of Health need to actively

negotiate with other countries, to quickly access the source of COVID-19 vaccine
and promote the supply of the best vaccine to the Vietnamese people. In addition, the
Government can proceed with a plan to provide vaccine passports to vaccinated
citizens to people who have been vaccinated. It is easier for people to travel to other
countries without needing to be quarantined.
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 • Plans for the aviation industry and aviation enterprises
First, the world's volume of goods transported by air is expected to recover at
a faster rate than other forms of transport. The reason is that companies promote air
freight to quickly meet increased consumer demand after the epidemic. With the
recovery of world trade and cargo flights still operating, passenger planes are used to
transport goods. Airlines cannot increase the conversion of passenger aircraft to
cargo aircraft to increase revenue.
Secondly, before the negative effects of COVID-19 on the revenue of the
aviation industry, the policy of reducing personnel has been applied by airlines.
However, this measure will lead to inevitable consequences in the future, which is
costly and timeconsuming to recruit and train qualified new employees. This also
adversely affects business activities in the post-pandemic period. The proposed
solution is not to make staff reductions, but to give employees quarterly rotating
leave. Thus, there is no need to recruit or train new employees while ensuring the
quality of employees for future business activities.
Third, expand domestic and international flight markets. During the epidemic
period, the measure of reducing flight routes was applied by airlines, but this
seriously affected the revenue of airlines. Faced with that situation, the proposed
solution is to exploit new flight routes in the future, when the epidemic is under
control. With the current trend of restructuring, the domestic service tourism industry
is on a strong development momentum, the domestic routes are completely potential
markets. In addition, international flight routes also need to be researched and
exploited more, especially in countries that have good disease control. In the long
term, the need to move between countries and territories is increasing, not decreasing.
Based on the latest report from CarTrawler in collaboration with IdeaWorks
Company, the results confirm that the Covid-19 pandemic has significantly changed
the way the aviation industry operates in many aspects in the long term . Airlines
need to focus their research on prospects coming from a core product, which is the
destination. Therefore, the airline's exploitation of routes after the pandemic wave
cannot ignore potential destinations.
Vietnam Airlines has actively launched a stimulus program in all three areas:
domestic, and international visitors to Vietnam (inbound), and Vietnamese people
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traveling abroad (outbound). Accordingly, the airline is committed to reducing
domestic fares by up to 50%, focusing on routes with great demand to increase
efficiency. The airline is also promoting the plan to open a direct route to India, and
continue to expand its flight network to Australia because these are two potential
destinations, determined to focus on promoting shortly.
Fourth, improving the service quality. Besides expanding the market,
improving service quality plays an important role in the development of the aviation
industry. It can be seen that when the global pandemic ends, people's travel needs
will increase rapidly. In that situation, Vietnamese airlines urgently need to ensure
and improve service quality such as expanding terminals and airports, upgrading
infrastructure to overcome overload; strengthen the development of utilities for
passengers, such as applications to support ticket purchase, flight tracking, update
information about canceled flights or promotions and promotions of airlines.
Moreover, upgrading the boarding process will help passengers feel more secure, and
touchless technology is an effective choice that needs to be applied at airports such
as contactless check-in, purchasing contactless shopping and payment, touchless
baggage claim,...
According to the leader of the Civil Aviation Authority of Vietnam, solutions
on taxes, fees and prices are extremely necessary. To handle this problem, businesses
can raise their charter capital by issuing shares. In 2021, Vietnam Airlines offered
800 million shares to existing shareholders to increase charter capital. As a result,
this business does not suffer from negative equity, helping the company to
supplement capital for production and business activities and cover cash flow deficit,
supporting liquidity.
Last but not least, the Civil Aviation Authority of Vietnam needs maximum
and practical support so that businesses can transform, restructure the market, and
even convert aircraft from passenger to cargo. The overall corporate restructuring
plan for the 2021-2025 period is expected to be a key solution to help aviation
businesses improve operational efficiency, strengthen financial capacity, and
gradually recover and prepare resources to develop after the epidemic is under
control, emphasized the leader of Vietnam Airlines.
Specifically, the restructuring plan was developed by aviation enterprises in
all fields, including solution groups such as fleet restructuring; capital restructuring

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through issuing more shares to increase charter capital, raising capital from outside,
issuing bonds; develop different scenarios to manage production and business while
continuing to promote freight transport to increase revenue,... to quickly recover and
break through the post-COVID-19 period, thereby contributing to development
socio-economic of the country.

5. Conclusion
There have been devastating effects of the global Covid-19 pandemic on all
countries, not only affecting health but also negatively affecting the economy and
social security. The COVID-19 pandemic has inflicted serious and widespread
impacts on a wide range of economic sectors, particularly the aviation industry. The
stagnation in operations, especially the negative effects on the demand, supply, and
market price of the aviation industry are heavy losses for this sector and restrain the
Vietnamese economy. When the epidemic is under control, the aviation industry
needs to soon recover and develop again.
Support during the epidemic is important, but to recover the economy, the
support after the epidemic is decisive. In which, it is important to provide long-term
support, not only tax and fee exemption and reduction, but also the establishment of
routes, flight operations and especially loans for airlines to supplement the lack of
capital lost during the temporary shutdown due to the epidemic to restore production
and business.
This report is not without its limitations, based on objective data available with
the understanding and knowledge gained from the subject of English for economics.
The solutions suggested in the report are only from a personal perspective and have
not been censored by any organization. To sum up, we also believe and look forward
to the recovery and development of Vietnam's aviation industry after the Covid 19
pandemic.

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Tài liệu Tiếng Việt
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