Overcoming challenges and unpredictable market fluctuations, Vietnam Airlines has ensured stable business operations in 2023 and is ready for the market’s recovery and development.

A tough year

Like most airlines around the world, 2023 continues to be challenging for Vietnam Airlines. These difficulties stem from objective factors beyond the airline’s control.

The first reasons to mention include prolonged conflicts between Russia – Ukraine and Israel – Hamas; the pressure of foreign exchange tension due to the strengthening USD; and high fuel prices. Years of experience reveal that a USD1 raise in fuel prices will increase the airline’s costs by thousands of billions of VND.

Hard economic times in many countries have led to a sharp decrease in consumer spending. A record low number of tourists has shrunk the airline’s market. The wave of “revenge travel” quickly passed, giving way to the wave of “too broke for revenge travel”. This can be clearly seen through average hotel room occupancy rates of under 30%, even in provinces/cities that are “hot” destinations in Vietnam. In the first 9 months of 2023, it’s estimated that the domestic aviation market reached 32.2 million passengers – a decrease of 4.0% compared to the same period in 2022. Specifically, in the third quarter, the estimated figure was  11.1 million passengers – down by 14.1% compared to the same period in 2022.

Recovery of the airline’s international market was also low, since routes to Russia were not re-launched, while the recovery of the “golden routes” to the Northeast Asia market remain slow. This forces airlines to focus on domestic routes, leading to an excess of capacity, causing sharp discounts in airfare, while input costs remain high and market demand does not correspond.

Overcoming hardships

In this generally tough climate, it has taken significant effort for Vietnam Airlines to maintain stable production and business operations. By finding flexible management solutions, actively following market developments, and taking advantage of every opportunity to increase revenue, the airline has gradually overcome difficulties and achieved relatively positive results.

Along with restoring our entire domestic flight network, Vietnam Airlines has focused on operating routes with maximum effectiveness. Measures include increasing flight frequency to the United States and Southeast Asia; restoring the Hanoi – Luang Prabang (Laos) – Siem Reap (Cambodia) route; opening new routes from Hanoi/ Ho Chi Minh City to Mumbai (India), Danang to Don Mueang (Bangkok – Thailand), Hanoi to Melbourne, and Ho Chi Minh City to Perth (Australia); and flexibly operating flights to/from Europe via West Asia and Russia, helping to save up to 40 minutes of flight time per trip and reduce operating costs.

These efforts have significantly improved Vietnam Airlines’ production and business results in 2023. Particularly, in the third quarter of 2023, the airline’s consolidated revenue reached nearly USD 1 billion, an increase of over 11% compared to the same period last year – and the highest level for any quarter since the outbreak of Covid-19 in early 2020.

As well as ensuring stable production and business operations, Vietnam Airlines has continuously innovated and upgraded service quality, being recognized and honored by passengers and leading global organizations with prestigious awards such as: “Top 20 Best Airlines in the World 2023” by AirlineRatings, “5-Star International Airline” by APEX, “Vietnam’s Most Valuable Airline Brand”, and “Top 5 Enterprises for Brand Strength Growth in the Industry” by Brand Finance Plc. In particular, Vietnam Airlines won 4 major awards, including “Asia’s Leading Airline for Economy Class”, “Asia’s Leading Airline for Cultural Identity”, “Asia’s Leading Airline for Cabin Crew Service”, and “Asia’s Leading In-Flight Magazine” at the 2023 World Travel Awards.

Future expectations

According to forecasts by aviation organizations and experts, the global aviation market will recover to the levels of 2019 by 2024, with the Asia-Pacific region accounting for up to 40% of passenger volume. This growth trend is expected to continue in the following years, positively impacting airlines, including Vietnam Airlines.

The domestic market is also expected to improve as macroeconomic factors continue to get better. For the Tet Nguyen Dan (Lunar New Year) of Giap Thin in early 2024, experts have predicted that  demand for family reunions and visits to relatives will grow higher than last year. Vietnam Airlines is ready to supply about 3 million seats on its domestic and international network to serve people reuniting and celebrating the Lunar New Year.

A key factor directly impacting the demand for air travel is the strong comeback of tourism in Vietnam, which is expected to be vibrant in 2024. With convenient travel conditions, liberal visa policies, economic recovery, and countries fully reopening, Vietnam’s tourism industry is expected to welcome 18 – 20 million international visitors in 2024 alone.

Anticipating the market’s revival, Vietnam Airlines has readied all of its resources to effectively operate its extensive domestic and international networks. With its ability to ensure a full range of essential aviation services, which few domestic airlines can offer, Vietnam Airlines holds unique values and advantages for a promising new year and sustainable, long-term development.