Vietnam Airlines, based in Hanoi, suffered a loss of $570 million in 2021, bringing its cumulative losses since the start of the pandemic to more than $928 million. The news comes as Vietnam Airlines calls for tax relief in the face of rising fuel prices. Despite this, the airline is recovering and putting the worst days of the pandemic behind it – Vietnam Airlines operated 21% more flights last month than in March 2021.
Total pandemic-related losses are about $970 million at Vietnam Airlines
Vietnamese newspaper VNExpress reports the numbers. The newspaper notes that the long-standing closure of Vietnam’s borders and the suspension of Vietnam Airlines’ commercial flights have had a significant impact on the airline’s results. Revenue last year was down 31% from 2020. The airline also raised a substantial amount of fresh capital last year – around $970 million, by issuing new shares. However, this sum barely covers the losses accumulated over the previous two years.
Vietnam fully reopened its borders to tourists last month – good news for all Vietnamese airlines. As the Vietnamese government began to lift travel restrictions, Vietnam Airlines began to increase flights again. In March, the airline operated 7,314 flights. However, not everything has been easy lately. Vietnam Airlines is feeling the heat of the war between Ukraine and Russia and rising fuel prices.
While the airline has suspended flights to Moscow, flights to Frankfurt (FRA), Paris Charles de Gaulle (CDG) and London Heathrow (LHR) continue. But rather than the usual flight path that crosses Russian airspace, these flights now pivot south and fly over China, Kazakhstan or North Africa.
Besides adding one to two hours to travel time, it costs Vietnam Airlines between $70,000 and $120,000 extra per week. Flights to the United States are also a bit of a deterrent. While only adding about 30 minutes to flight time, these detours also add between $20,000 and $40,000 to Vietnam Airlines’ weekly operating costs.
Jet fuel normally accounts for around 30% of Vietnam Airlines’ operating costs. Photo: Airbus
Vietnam Airlines wants lower fuel taxes and higher passenger surcharges
Normally, fuel accounts for around 30% of Vietnam Airlines’ daily operating costs. But the price of jet fuel has skyrocketed this year. Singapore jet fuel was selling for more than $143 a barrel over the weekend. Vietnam Airlines has already applied to Vietnamese aviation authorities for permission to start charging passengers a fuel surcharge. The airline also wants the Vietnamese government to remove its import tax on kerosene and reduce the environmental tax.
Vietnam imposes a fuel import tax of 7% and an environmental tax of around six cents per litre. Vietnam Airlines says reducing these taxes would save it more than $26 million a year.
Vietnam Airlines is resuming flights to most of its pre-pandemic destinations and is once again in hiring mode. Photo: Boeing
Despite these obstacles, Vietnam Airlines now serves almost all the destinations it flew to before the pandemic. Last month, the airline said it wanted to start expanding its fleet again and resumed hiring pilots, flight engineers and cabin crew. A Vietnam Airlines 787 Dreamliner captain can now earn $13,300 a month, while narrow-body Airbus and Embraer captains earn more than $10,400 a month.
With the Vietnamese holiday season looming this month, Vietnam Airlines Group is firmly in recovery mode. The airline group (which includes Pacific Airlines and VASCO) will offer nearly 750,000 seats and 4,000 flights during the holidays, or 10% more seats compared to the equivalent period of 2019.
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