The Vietnam Aviation Business Association (VABA) has proposed the Government lend domestic airlines a credit package of between VND25-27 trillion (US$1.08-1.17 billion) at a preferential interest rate for a three-four year term.

This is one of recommendations the association sent recently, asking the Government stimulate the sector as it is facing serious impacts caused by the COVID-19 pandemic.

VABA also called for the extension of the period of exemption and reduction of aviation service charges until the end of 2021. At the same time, it asked the Government to direct the Ministry of Transport and the Airport Corporation of Vietnam to cut 50% of all airport service charges.

“Airlines expect the Government to ask the National Assembly Standing Committee to allow a 70%, or at least 50%, cut of environmental protection tax for flying fuel by the end of 2021, and consider and direct speeding up the construction progress of upgrading runways at Noi Bai and Tan Son Nhat international airports, which should be completed in six months,” VABA noted in its recommendation document.

VABA said the pandemic had recurred in some localities, especially Da Nang, a key aviation market. The outbreak is also having a psychological impact on society, causing a sudden drop in demand for domestic travel and air travel.

Although airlines have made efforts to limit losses such as cutting total costs from 50% to 70% year-on-year, negotiating with partners to reduce debt and interest rates, selling aircraft, transferring assets, reducing salaries for all staff and decreasing airfares, however all airlines face serious cash flow depletion.

The International Civil Aviation Organisation recently forecast that it would take until 2024 for the world's airlines to recover their business to levels seen in 2019. Vietnamese airlines will suffer an estimated loss of more than US$4 billion this year.

VABA also petitioned Prime Minister Nguyen Xuan Phuc allow reopening flight routes to countries that have controlled the outbreak, and studying standards on disease prevention and infection control in air transport, allowing tourists to enter Vietnam if they meet such requirements.

“More than ever, Vietnamese airlines all are in need of timely support from the Government, ministries and agencies,” VABA said.