Jun 16, 2021 / 18:19

Aviation, tourism industries on brink of collapse amid Covid-19: Ministry

Eight business sectors, including hospitality services, retail, garment, car manufacturing, agriculture, logistics, aviation, and IT are facing an unprecedented crisis.

Up to 90% of tourism companies were forced to suspend operations, making the aviation industry facing financial challenges with the national flag carrier Vietnam Airlines at risk of bankruptcy.

The Ministry of Planning and Investment (MPI) gave a grim look in its report assessing local businesses’ situation in 2020 and the first five months of this year.

 Vietnam Airlines is predicted to suffer losses of VND10 trillion in the first six months. File photo

According to the report, eight business sectors, including hospitality services, retail, garment, car manufacturing, agriculture, logistics, aviation, and IT are facing an unprecedented crisis.

According to the MPI, the aviation industry was the most affected sector by the pandemic as demands for air transportation in 2020 went down by 34.5-65.9% year-on-year, while revenue from local airlines also saw a contraction of 61%.

The third Covid-19 outbreak flaring up in early 2021 further put them into a dire situation as revenue plunged by 80% against last year.

“Even when the Covid-19 pandemic is contained this year, it is predicted that the aviation industry would fully recover to its pre-pandemic condition in 2024,” stated the MPI.

Vietnam Airlines estimated its losses in the first quarter to be around VND4.8 trillion (US$209 million), the figure could even go up to VND10 trillion ($436 million) for the first six months of this year.

The MPI noted that the national carrier's overdue debt of VND6.24 trillion (US$272 million) could push them towards 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 airlines such as Vietjet Air, Bamboo Airways are also predicted to face more difficulties as they have used up all financial resources to keep providing air transportation services, it noted, saying Vietjet Air is in need of VND10 trillion ($436 million) for operation.

90% of tourism companies suspending operation

According to the Vietnam Tourism Association (VITA), travel agencies had high expectations for a recovery in 2021, but the resurgence of the pandemic in the Tet holiday put a dent in their hope.

“The number of tourists booking tours during Tet sharply declined, while many tour operators have no income to keep business running,” said the association.

Up to 90% of travel agencies, restaurants, and hotels were forced to close, and the remaining 10% scaled down operation.

The VITA said the majority of travel agencies have laid off 100% of their workforce, meanwhile, the rates for outbound tour operators were around 60-90%.

 A Hanoi-based garment factory. File photo

The garment is the second industry facing severe consequences from the Covid-19 pandemic that it has suffered a deceleration of 10.5% in growth for the first time in the past 25 years.

In 2020, garment export value declined by $4 billion compared to the previous year to $35 billion.

The MPI said the pandemic is put under control and garment firms are being able to take advantage of free trade agreements (FTAs). The industry could only fully recover to the 2019 level by the second quarter of 2022, or the fourth quarter of 2023 in a worst-case scenario.