The Transport Ministry is asking for an aviation service fee subsidy for local airlines that have suffered an initial economic loss of over VND30 trillion (US$1.29 billion) due to the COVID-19 outbreak.

Vietnam Airlines aircraft (Source: VNA)

In the latest document on the disease’s impact on the transport sector sent to the Ministry of Planning and Investment, the Transport Ministry said that all Vietnamese airlines have grounded flights to and from China and the Republic of Korea, cut 34% of flights to Taiwan (China) and 92% of flights to Hong Kong (China).

While all 160 flights to Japan operating as usual so far, carriers are assessing the epidemic situation and there is a high possibility they will have to reduce services soon.

In the best scenario with the epidemic contained before April, the Civil Aviation Administration of Vietnam (CAAV) estimated that Vietnam’s airlines would transport 48 million passengers, down 9.2% year on year.

In the worse scenario with the epidemic put under control before June, Vietnamese carriers would transport 45.7 million passengers, down 17%.

To support domestic carriers, the Ministry of Transport is requesting the Government to provide aviation service fee subsidies for local airlines.
The ministry suggested cutting half of takeoff, landing and operation service fees for domestic flights from March 1 to May 31. The duration may depend on the disease’s developments.

It also proposed the Government assign the Finance Ministry to consider the exemption of import tariffs and environmental tax on aviation fuel for three months.
If that makes it difficult to balance the State budget, the ministry proposed reducing 50% of import tariffs and environmental tax on aviation fuel, and allowing a delay of tax and budget contributions by airlines.

In the latest developments, national flag carrier Vietnam Airlines announced the suspension of flights between Vietnam and France starting March 17 amid the worsening COVID-19 outbreak.

In addition, it has temporarily stopped flights between Vietnam and Malaysia from March 18-31 due to the Malaysian government’s border lock-down during the period.