Inadequate infrastructure costs Vietnam Airlines $20M loss

Dang Ngoc Hoa, president of the national flag carrier, said at a meeting with the Ministry of Transport on Thursday that one of the most pressing challenges facing airlines at domestic airports this year was congestion, both in the air and on the ground.

Hoa said several Hanoi-HCMC flights scheduled for two hours were put into holding patterns around Tan Son Nhat in HCMC, Vietnam’s largest and busiest airport.

He said the holding patterns, which increased fuel costs and delayed other flights, were due to both overwhelming air traffic and insufficient infrastructure on the ground.

Tan Son Nhat currently has a capacity of 28 million visitors a year.

But in 2019, before Covid, the total number of visitors to the airport exceeded 41.2 million, 150% over its designed capacity. In 2022, when the travel-hindering effects of lockdown still lingered, the number of visitors reached 34 million, still over the airport’s designed capacity by 21%, enough to overload various infrastructure components at Vietnam’s airports.

Noi Bai in the capital has a capacity of 25 million visitors a year. But the number of 2023 visitors to the airport is expected to reach around 30 million.

Along with the dearth in infrastructure, the average flight fuel prices for the year increased to around $105 per barrel, a 30% increase compared to 2019, increasing operation costs. For Vietnam Airlines alone, 2023 operation costs are estimated to reach around VND5.9 trillion, Hoa said.

The global aviation market has yet to recover post-Covid, especially for vital markets like Japan, South Korea and China. The numbers of visitors to Vietnam from Europe and Northeast Asia have only recovered by 45% and 64%, respectively, compared to 2019. This year, the total number of international visitors reached around 30.3 million, 2.6 times the same period last year. But figure also only amounts to 73% of the numbers seen in 2019.

For the domestic market, the number of visitors amounted to 40 million, a 6.9% drop compared to 2022, but a 7.5% increase compared to 2019.

Hoa said 2024 would be an important year in the recovery of the aviation industry, following long periods of Covid-19 impacts. He added that Vietnam Airlines planned to retain its market shares on vital air routes, expand international routes, and expected to open new trans-continental routes to Canada, Italy and other Northern European countries.

Hoa has proposed that the transport ministry promptly issue a circular regarding the management of slots at airports to increase efficiency. This would also allow airlines more flexibility in terms of determining ticket prices, he said.