The recovery of Vietnam’s aviation industry

Business situation of the “big guys” in Vietnam’s aviation industry in 2023. The recovery of Vietnam’s aviation industry.

Vietnam’s aviation industry has passed the most difficult period caused by the Covid-19 epidemic. Since 2022, Vietnam’s aviation industry has recorded strong recoveries. This can be clearly seen in the business situation of two big aviation industry players, Vietnam Airlines and Vietjet Air.

The business situation of the “big guys” in Vietnam’s aviation industry in 2023.

According to a general report, in the first quarter of 2023, airports across the country recorded nearly 37 million passengers. This number has increased by 55% compared to the same period in 2022. In which, other domestic and foreign volumes have grown strongly. With 9.7 million international passengers and 27.2 million domestic passengers, Vietnam’s aviation industry has increased by 976% and 18% respectively compared to the same period in 2023.

Vietnam Airlines – the “big man” of Vietnam’s aviation industry

Vietnam Airlines recovered strongly in revenue but still recorded a loss of tens of billions:

In the first 4 months of 2023, with the growth of the domestic and global aviation industry, the national airline Vietnam Airline also has a significant growth. In the first quarter of 2023, Vietnam Airlines recorded a consolidated profit before tax of more than 19 billion dong, a spectacular reversal with a loss of over 2,600 billion dong in the first quarter of 2022. However, profit after tax was still negative 37 billion dong.

Specifically, according to the business results report of Vietnam Airlines, the airline recorded revenue from air transportation of VND 23,640 billion. This figure is double compared to the same period in 2022. This level of revenue shows a remarkable prosperity of the aviation industry, when this level of revenue is close to the pre-pandemic period of 2019.

On the other hand, the growth rate of total revenue and other income in Q1 was about 114%. This figure is equivalent to an increase of 9,600 billion VND. The reason for this strong growth mainly comes from service provision revenue. Revenue from providing services of the aviation industry has increased by more than 9,500 billion VND compared to the previous year. Meanwhile, Vietnam Airlines’ total cost in the first quarter of 2023 was about VND 7,300 billion, up 67% over the same period last year. With such high revenue and low costs, gross profit for Vietnam Airlines has reached more than 1,500 billion dong and after-tax loss has decreased by 2,300 billion dong over the same period.

Vietnam Airlines’s fares

At the present time, the domestic airfare of Vietnam is said to be cheaper than the same period every year. But in fact, the airfare has not yet returned to the cheapest level of previous years. The reason for this decrease is that the travel demand of people in the summer of 2023 is still small, and the international market is still growing slowly.

Vietjet Air – the “big man” of Vietnam’s aviation industry:

Vietjet Air strongly recovered in revenue and profit:

Despite having a smaller revenue than Vietnam Airlines, VietjetAir recorded a significant profit. In the first quarter, Vietjet Air safely performed 31,300 flights, transporting 5.4 million passengers. These two numbers have increased by 57% and 75% respectively over the same period last year.

Influenced by the strong recovery of international airlines, in the first 4 months of 2023, Vietjet Air achieved a revenue of 12,880 billion VND in air transport activities. During the same period, Vietjet Air’s after-tax profit reached VND 168 billion. These two numbers have increased by 286% and 320% respectively over the same period last year.

With consolidated business results, Vietjet has a revenue of VND 12,898 billion. This number has increased by 185% over the same period in 2022. Profit after tax in the first quarter of 2023 reached VND 173 billion.

Vietjet Air’s fares

Positioning itself as a low-cost airline, Vietjet’s fares are cheaper than Vietnam Airlines. However this difference in price brings some difference in the quality of service and other services.

The recovery of Vietnam’s aviation industry.

The recovery of Vietnam’s aviation industry: strong growth in revenue and profit:

2023 is considered to be a year of strong growth in revenue and profit. The price of jet fuel is forecasted to decrease by 20-30% compared to the average level in 2022 while the demand for air transport will increase significantly.

As of the end of June 2023, domestic petroleum has decreased by 30-40% compared to the same period last year. Although from now until the end of the year, gasoline prices are expected to increase, but in general, they will still be lower than in 2022. This is a huge development advantage for the aviation industry. Because fuel costs account for 60% of total flight costs. When this cost is reduced, it will increase profits and reduce the cost burden for airlines.

Besides, when the tourism market is active again, the travel demand of people increases even more. Not only is the number of foreign tourists going to and from Vietnam increasing, but domestic tourism is also being promoted by the State’s policies. This is a good sign for the aviation industry. In addition, the Chinese market is being opened, and visa policies are also gradually being eased. This easing will open up access for Vietnamese airlines to the world’s most populous market.

The recovery of Vietnam’s aviation industry: the progress in service quality has not been clearly seen:

Although the market recovery is clear, in order for Vietnam’s airlines to really recover and develop, airlines need to improve their service quality. According to the general newspaper, the rate of on-time flight in the whole aviation industry in Vietnam is seriously decreasing.

This drop in punctuality rate is due to many reasons: overload, delayed preparation, … But the airline’s untimely flight has caused dissatisfaction for customers. Many people have to wait for hours in front of the airport with an inhibited and tired mood. Many flights are suddenly canceled, causing dissatisfaction with customers.

The aerial mobility market is still a potential market in Vietnam. For sustainable development in the aviation industry, businesses need to pay more attention to service quality. The government also needs to have reasonable policies to support businesses and protect people’s interests to develop Vietnam’s aviation industry.


Cre: viracresearch.com