Many Vietnamese airlines firms have asked for help from the government because of the losses they have been taking as a result of tensions over the East Sea.
The Ministry of Transport sent a report to the government outlining the difficulties faced by Vietnamese carriers and proposed some supportive measures.
The report indicates that incidents of unrest in Binh Duong Province and Vung Ang industrial parks in protest of the illegally-placed Chinese oil rig have had a negative impact on the number of passengers traveling from China. Authorities in China, Taiwan and Hong Kong have advised their citizens to avoid travel to Vietnam. Many tours to China have also been cancelled.
Vietnam Airlines takes losses from East Sea tensions
Vietnam Airlines has incurred the biggest losses, with the situation having cost them an estimated VND2.88 trillion (USD135.6 million).
Vietnam Airlines saw a 50% drop in seat occupancy to China. Between mid-May and mid-June, the airline reported over 42,000 cancellations, equivalent to 170 flights, or a loss of over USD9 million in revenues.
Vietnam Airlines has increased domestic flights, but this measure did not offset their losses.
Several subsidiaries of Vietnam Airlines have also reported a slumps in business, adding to the national-flag carrier’s losses. Cambodia Angkor Air, a joint venture between Vietnam Airlines and a Cambodian partner, has recently had to shorten their aircraft rental contracts with Vietnam Airlines.
Jetstar Pacific, the budget airlines under the management of Vietnam Airlines, reported a fall in revenues from flight routes to Macau.
VietJet Air has been also compelled to suspend the routes from Hanoi to Thailand as well as between Danang to China.
The ministry advised airlines to carefully plan and regulate their schedules, reduce expenses and increase productivity. Vietnam Airlines was asked to continue development of intercontinental flights.
The ministry has reduced flight regulation and other fees at airports by 25% for all domestic airlines through the end of the year. The Airports Corporation of Vietnam was also asked not to increase leasing rates and service fees at airports this year.
The ministry proposed that the government direct the Ministry of Finance to cut taxes on jet fuel from 7% to 3%, as fuel accounts for about 40% of an airlines expenses.
The ministry also called for slackening procedures to develop routes to important markets such as the UK, France, Germany, Australia and India.