The Government Office has instructed the Ministry of Planning and Investment, the Ministry of Finance, the Ministry of Transport and the State Bank of Vietnam to study a proposal by the Vietnam Aviation Business Association (VABA), in which the airline industry is to gain access to VNĐ25 trillion (over US$1.1 billion) of zero-interest loans.

The loans, according to VABA, are intended to help the airlines to cover recurring expenses, acquire supply and new machinery and to perform maintenance duties during the pandemic. The loan amount will be subject to the size of each airline, its share of the market and the amount it contributed to the State budget.

The association cited a VNĐ4 trillion, zero-interest, 3-year-term loan granted to Vietnam Airlines as a basis for their proposal, saying the Government must ensure a level playing field. In addition, it has also demanded a 70 per cent cut in environmental tax for all the airlines.

VABA's chairman Phạm Việt Dũng said the tax was no longer applicable as almost all international and domestic flights have been shuttered. VABA, therefore, asked the Government to reduce the tax from VNĐ3,000, or US$0.13, to VNĐ1,000 from now until June 6, 2022.

In addition, VABA asked the Government to consider a proposal to slash 30 per cent off the airlines' income tax for 2020 and the first half of 2021, 50 per cent off VAT tax, industry workers' income tax and 50 per cent off taxable amount on spare parts for aeroplanes.

The association said the third and fourth outbreak of the novel coronavirus in Việt Nam resulted in a 90 per cent drop in revenue for the airlines, compared to the pre-pandemic level.

A VABA report said almost all international and domestic flights have been stopped since May. Revenue dropped by 60 per cent compared to the previous period as airlines reported a combined loss of VNĐ16 trillion in 2020.

The airlines have had to pay more than VNĐ100 billion ($4.4 million) every day while 80-90 per cent of their fleets were grounded, according to Bùi Doãn Nề, vice-president of the Vietnam Aviation Business Association (VABA).

Short-term debts due for payment among the three largest airlines have reached a total of VNĐ36 trillion, with VNA alone accounting for VNĐ20 trillion. VABA has asked banks for loans worth VNĐ30 trillion, of which VNĐ10-12 trillion allocated to VNA, VNĐ10 trillion to Vietjet, VNĐ5 trillion to Bamboo Airways, VNĐ5.7 trillion to Pacific Airlines and VNĐ1 trillion to Vietravel Airlines.

In a recent development, VABA has sent a number of proposals on how to support the airline industry's recovery. The proposals include faster vaccination of the population, a standardised COVID-19 testing protocol, internationally recognised vaccine passports and the establishment of safe travel corridors for international visitors. — VNS