Three development scenarios for Vietnam's aviation industry

VCN - According to Dr. Bui Doan Ne (photo), General Secretary of the Aviation Business Association, in the next five years, aviation will remain affected by the Covid-19 pandemic itself, the level of pandemic control and the development of the global and domestic economy, especially development of the tourism industry, capacity and reality of restructuring of aviation enterprises.
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Dr. Bui Doan Ne
Dr. Bui Doan Ne

Vietnam has fully opened international flights since March 15. In your opinion, what difficulties and challenges will the aviation industry face?

In the period of 2022-2025, the aviation industry may face difficulties and challenges from market changes and customer needs, as well as the consequences and sequelae caused by the pandemic and the related policies left to the market and to Vietnamese airlines themselves. Additionally, the decline in demand due to the post-pandemic economic downturn, the control of epidemiological hygiene, and the epidemiological checks that were conducted during the pandemic will be implemented in the future, which will significantly reduce the number of passengers traveling by air.

Simultaneously, the impact of international disputes and conflicts caused fuel prices to rise and airlines to Europe had to avoid the airspace over some relevant countries, causing high transportation costs. Moreover, due to this dispute, the number of customers from Russia and Europe to Vietnam also decreased sharply. Another significant impact is that the state of embargo between countries, which adversely affects global supply chains, including those directly related to the aviation industry.

Especially, in the near future, not only will Vietnam have new aviation enterprises, but also many other countries' aviation enterprises will also launch business activities in Vietnam.

Additionally, several foreign enterprises have established sustainable relationships with customers, creating a superior position and even having a monopoly in some fields, especially freight. Thus, the competitive pressure on Vietnam's aviation enterprises is not only greater from more sides, but also more diverse. This requires Vietnamese aviation units to make comprehensive efforts to create integrated competitiveness to maintain and improve their position.

Even among Vietnamese airlines, competition is fierce. The depletion of financial resources after the pandemic led to even greater difficulties for aviation businesses, making it difficult to take advantage of the opportunities that will arise when the pandemic ends.

How do you forecast the growth scenario for the aviation industry in the future?

There are three development scenarios for Vietnam's aviation industry. For the expected scenario in 2022, Vietnam's aviation industry will recover, competitiveness will reach pre-pandemic levels, and basic performance indicators of the industry will return to normal as before the pandemic. The supply chain of Vietnamese airlines will be restored from mid or late 2022. Industry performance will reach high level by the end of 2023, in which domestic passenger transport will be restored in early 2023, international passenger transport will recover in mid or late 2023.

In the optimistic scenario, the capacity of Vietnam's aviation industry will be enhanced, the industry's competitiveness will be significantly improved, and the industry's operational efficiency will be better. The position of Vietnamese aviation will be significantly improved in the region and internationally. Industry performance will reach its pre-pandemic peak in early 2023, in which domestic passenger transport will be restored by the end of 2022, and international passenger transport will be restored in early 2023.

For the pessimistic scenario, the capacity of Vietnam's aviation industry will be restored from the beginning or middle of 2023. The performance of the Vietnamese aviation industry will reach its pre-pandemic peak at the end of 2024, in which domestic passenger transport will be restored by the end of 2023, and international passenger transport will be restored by mid or late 2024.

To support the aviation industry to quickly recover and return to the "race track", what specific support measures do you think we will need to implement?

In my opinion, on the one hand, the State should continuously invest in building, expanding, and synchronizing the infrastructure system of the aviation industry and the infrastructure systems related to the operation of Vietnam's aviation industry. On the other hand, it is necessary to have policies to strengthen the attraction of private investment and mixed public-private forms to diversify the infrastructure system, speed up the diversification the infrastructure system, speed up the upgrade, and expand this system according to market requirements. At the same time, renovate and complete the organization and management to improve the efficiency of this system.

Furthermore, the industry must prepare and soon start negotiations with countries that are markets with great potential for the aviation industry that Vietnam has not yet exploited much, so that Vietnamese airlines have favorable conditions to penetrate and exploit these markets.

In the future, the State needs to continue negotiating to expand the scope of recognition of Vietnam's "vaccine passports", and agree on procedures with passengers flying to and from Vietnam. In addition, the State needs to promptly supplement measures to protect the interests of the domestic aviation industry, to prevent and combat unfair competition measures by foreign aviation enterprises, and avoid letting them take advantage to suppress domestic enterprises.

Simultaneously, comprehensively review and evaluate the impact of State policies on Vietnam's aviation industry and perfect that policy system to maximize their combined positive impact. Continue to implement supportive policies so that aviation businesses can quickly overcome the pandemic consequences to recover and develop soon.

Thank you Sir!

By Xuan Thao/ Ha Thanh

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