What lies ahead for aviation industry after COVID-19 survival struggles?

VOV.VN - Experts anticipate that the upcoming year will remain challenging for the aviation industry, with the domestic market already being fully exploited and international flights yet to be restored.

These factors indicate that this squeeze in the aviation market will create more fierce competition.

The current year is rated by the International Air Transport Association (IATA) as the worst year in history for the world's civil aviation industry. Commenting on the prospects for the aviation industry ahead in 2021, industry insiders believe that it will be a difficult year.

Ways in which to maintain operations will continue to be a problem for airlines in the "mortal" war for post-novel coronavirus (COVID-19) survival and development.

According to data released by IATA, since the beginning of the year the COVID-19 pandemic has caused the sales of the aviation industry to suffer losses of approximately US$510 billion. It is predicted that the sector will lose roughly US$118.5 billion this year and about US$38.7 billion next year, therefore not being until the middle of 2022 until airlines truly recover to 2019 levels.

In the nation, data from the Civil Aviation Authority of Vietnam (CAAV) indicates that after years of maintaining continuous double-digit growth, the unprecedented impact of the COVID-19 pandemic this year has caused the domestic air transport market to endure a sharp drop compared to previous years.

Through airports, the number of passengers is estimated to be at 66 million and 1.3 million tonnes of cargo, down 43.4% in passengers and 15.6% in cargo, respectively, in comparison to 2019’s figures.

What scenario for the aviation industry ahead in 2021?

According to the CAAV, the dual impact of the COVID-19 pandemic and unfavourable weather conditions seen in flooding in the Central region this year has led to the aviation industry being severely affected. As a result, the number of passengers travelling through Vietnamese airports has fallen by 43.5% over the same period from last year.

Looking ahead, Pham Van Hao, deputy head of the Civil Aviation Authority of Vietnam, said that an assessment conducted by the International Civil Aviation Organization (ICAO) indicate that there are two development scenarios possible for the aviation industry.

In the first scenario, the local aviation industry will witness a V-shaped recovery, declining sharply before enjoying rapid growth.

Under the second scenario, the sector will undergo a U-shaped recovery, suffering a significant drop for between three and five months before making a gradual recovery. Indeed, the aviation market’s growth is anticipated to decline by between 48% and 71% depending on the pandemic developments.

Commenting on the gradual recovery of the local aviation industry in line with the V-shaped recovery scenario, Hao says that the CAAV is co-operating with relevant agencies to submit a plan to the Government to reopen international flights. This is to be done with the aim of intensifying pandemic control without massively opening flights for economic purposes, while simultaneously paying no attention to pandemic containment.

Leaders of Vietnam Airlines state that, with an optimistic scenario, 2021 will see the nation’s international aviation market recover to the same level as 2019. It is therefore expected that Vietnam Airlines will make profits from 2023 and go on to suffer no accumulated losses by 2025.

With regard to the prospect of the aviation industry, Mirae Asset Securities Vietnam (MASVN) believes that next year will be a difficult period as there are no prospects of a serious recovery until international flights reopen.

Furthermore, a major difficulty facing the aviation industry ahead in 2021 is that the market has become narrow, serving to make competition fiercer, according to MASVN experts.

Economists and managers emphasise that priority should be given to "saving" aviation because of its important role and its wide-ranging effects on the local economy, with there being many negative consequences if the industry is not saved in time.

Dr. Tran Dinh Thien, a member of the Prime Minister's Economic Advisory Group, says that in terms of national vision, Vietnamese airlines must be supported by the state.

In addition to the Government’s bailout packages, share issuance plans to increase charter capital remains one of the first solutions used by the majority of airlines globally.

This action not only replenishes issues regarding a lack of cash flow, but also enhances an airlines' financial capacity as a means of ensuring sufficient capital which can be used to maintain their operations and create a source of development investment in the post-COVID-19 period.