Passengers increase but airfares decrease

Sharing at the conference on implementing tasks for the last 6 months of the year of the Civil Aviation Authority of Vietnam on the afternoon of July 24, Mr. Trinh Ngoc Thanh, Deputy General Director of Vietnam Airlines, said that according to the International Air Transport Association (IATA), the international air transport market has basically stabilized again.

Airlines say they are still struggling with low seat occupancy rates, but are still flying to keep their slots.

However, the market recovery is still slower than expected, only 88% compared to 2019. It is expected that it will return to pre-Covid-19 levels by 2024.

It is worth noting that there are differences in assessing the recovery of aviation. The Ministry of Transport and the Civil Aviation Authority of Vietnam assess by the number of flights, while airlines assess by the number of passengers. If we count the number of flights, the aviation industry has basically recovered, especially on flights to and from Noi Bai and Tan Son Nhat, but the number of passengers has not reached the same level.

Specifically, with international flights, by July the total number of Chinese visitors to Vietnam had only reached 10%, and Japanese visitors had reached 54%. Korean visitors were better off, reaching 80% due to the large number of business visitors and full recovery, while the number of tourists remained low. However, the market was also somewhat compensated by the number of Indian visitors (nearly doubled), Australian visitors (increased by more than 10%) and American visitors (more than 10%).

In the domestic market, the number of passengers this year exceeded 2019 by about 10% but decreased compared to 2022. During the peak summer season, although the number of passengers increased by 14%, the average price decreased by 14%. The reason is that supply exceeds demand, airlines cannot fly internationally, so they concentrate on the domestic market.

In addition, airlines also have to face the increase in fuel prices (currently at 103 USD/barrel, compared to only about 83 - 84 USD/barrel in the same period in 2019); the devaluation of most currencies compared to the USD.

"We are still determined to try to recover. In fact, both domestic and international flights have basically recovered. However, the average seat utilization rate on international flights is only about 67 - 68%, more than 10% lower than in 2019," said Mr. Thanh.

Mr. Dinh Viet Phuong, CEO of Vietjet, also affirmed that airlines are still facing difficulties. In fact, the number of flights has increased but the number of passengers has not increased, and the seat utilization rate has decreased. There is a flight from Japan with an occupancy rate of only 40%.

According to Mr. Phuong, the summer peak usually lasts until around August 15, or even the third week of August. However, this year, by July 15, the number of passengers has decreased. It is worth noting that despite the decrease in passengers, airlines still have to fly regularly, because if they do not fly, they are afraid of losing their historical slots (allocated take-off and landing times - PV).

"Closely monitor the use of slots but must support airlines. Slots are resources but slot operations must be flexible and effective, in a way that promotes airline development," Mr. Phuong suggested.

Director of the Civil Aviation Authority of Vietnam Dinh Viet Thang said that in reality, there is a situation where airlines are having to "fly to keep their slots".

With international flights, you have to fly to keep your slots. The market is down, but if you don't guarantee the number of flights this year, they will cut slots next year.

"We understand the difficulties of airlines, and have discussed with aviation authorities of other countries to support them according to the principle of "reciprocity", if they fly to us, we must let them fly to them. But in reality, there are markets in other countries that do not fly to our country, such as Australia, India, and the UK," said Mr. Thang.

The leaders of the Civil Aviation Authority of Vietnam affirmed that they will make every effort to negotiate to keep slots for Vietnamese airlines. In extremely difficult cases, beyond the capacity of the Civil Aviation Authority, negotiations will be proposed at higher levels, through diplomatic channels.

In the domestic market, according to the Director of the Civil Aviation Authority of Vietnam, "there are airlines that say the market is low and do not use up all their slots, but they refuse to give them back to other airlines". Circular 29 clearly stipulates that the historical slots of a flight schedule season are a series of slots that are used correctly with a rate of at least 80%. Therefore, airlines that want to keep their historical slots must ensure the usage rate according to regulations.

However, Mr. Thang also said that he will soon study the recommendations of the companies and report to the Ministry of Transport to make appropriate amendments to Circular 29.

In the first 6 months of 2023, the total number of air passengers is estimated at 34.7 million, an increase of 49.6% over the same period in 2022. Of which, international passengers reached 14.7 million, an increase of nearly 5 times over the same period in 2022, equal to 73.5% over the same period in 2019. Domestic passengers reached 20 million, down 3.4% over the same period in 2022 but up 8.1% over the same period in 2019.

The total market of goods is estimated at 483,000 tons, down 26% compared to the same period in 2022. Of which, international goods reached 405,000 tons, down 30% compared to the same period in 2022. Domestic goods reached 77,600 tons, up 10% compared to the same period in 2022.

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