While it would be a difficult year since the coronavirus variant identified in the U.K. is spreading quickly and new outbreaks are emerging in many countries, "the future of the aviation industry could be brighter when large-scale Covid-19 vaccination is carried out," SSI said. "This could only happen in the second half of 2021."

Airlines will mainly focus on the domestic market in 2021 since international travel would not resume until the end of 2021, and the international aviation market could recover in 2022.

"In 2021, airlines strategies will include increasing the number of inbound commercial flights, providing better flight services and offering a range of fares so that passengers will have more options," SSI analysts said.

The baseline scenario is for airlines to suffer losses though they would be halved from 2020.

The number of domestic passengers will rise to 75 million, the same as in 2019. The number of foreign visitors is expected to reach 12 million, or 34 percent of the pre-pandemic number.

Besides the challenges posed by Covid-19, airlines also face rising fuel prices, while competition is increasing with Vietravel Airlines, Vietnam’s sixth carrier, set to enter the aviation market this month.