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Lan Bui
As we enter the second half of 2022, the most challenging period in the history of the global aviation industry has passed. Capitalizing on the momentum for market recovery, the national carrier Vietnam Airlines is regaining its leading position through a comprehensive restructuring program. Mr. Dang Ngoc Hoa, Chairman of Vietnam Airlines Corporation, joined us to elaborate.
Interviewer: After two years battling the Covid-19 outbreak we all longed for the “new normal”. How is Vietnam Airlines moving ahead?
Chairman Dang Ngoc Hoa: Early this year, as Vietnam’s economy and that of other countries recovered, Vietnam Airlines resumed its international flight network and increased domestic flight frequency. Throughout this process, the airline has demonstrated its pioneering role as the national flag carrier by bouncing back alongside Vietnam’s aviation industry.
Domestic travel has shown positive recovery with over 10% growth in passenger volume compared to 2019. Strong domestic growth has made Vietnam the fastest-growing domestic aviation market in the world, according to the International Air Transport Association (IATA). However, the recovery of international travel is much slower, with passenger volume only 11.7% of that before the pandemic.
In such a situation with both positive and negative elements, Vietnam Airlines quickly caught up with the market and immediately met the strong surges in demand of every customer segment on all flight routes. By answering the calls for economic recovery and growth, as well as travel demand during the peak summer season, the Corporation helped generate revenue and improve cash flow. All of these outcomes were made possible thanks to our thorough preparations in every aspect from operational planning to technical support, services, and commercial activities, allowing us to take off once again in the best possible capacity.
As a result, in the first half of 2022, Vietnam Airlines Group (including Vietnam Airlines, Pacific Airlines, and VASCO) carried 9.5 million passengers, 24.6% more than we predicted. Of this figure, domestic passengers accounted for 8.9 million and international travelers 550,000, exceeding our targets by 25.9% and 6.7% respectively. Vietnam Airlines’ air cargo transportation reached 100% of our target at 113,400 tons. Consolidated revenue for the first six months was VND 30,650 billion, 35.3% higher than our initial target thanks to various flexible sales programs.
Another milestone for Vietnam Airlines is the Extended Diversion Time Operations (EDTO) certification granted by the Civil Aviation Authority of Vietnam (CAA) – a certification that we are the first and only airline in Vietnam to hold – for twin-engine operations conducted over 180 minutes. In particular, the EDTO for Airbus A350s reaching 240 minutes involves the most stringent standards that only a few airlines in Asia have achieved. This certification is especially meaningful as it not only helps Vietnam Airlines optimize our flight routes and reduce costs but also proves our operational and technical capacity and the reputation of our fleet.
Interviewer: Vietnam Airlines has made remarkable accomplishments. However, given the prolonged global geopolitical instability, what future challenges remain?
Chairman Dang Ngoc Hoa: Despite the aviation industry’s robust recovery and positive outlook, it is still early for airlines to fully recover and resume business operations after Covid-19.
While domestic passenger numbers are up, on average, airfares are 15% cheaper than those pre-Covid, leading to lower revenues for Vietnam Airlines. The international market, which accounts for a large proportion of Vietnam Airlines’ revenues, is witnessing a much slower recovery as key markets like China continue to implement Zero-Covid policies, while Japan and South Korea are delaying full reopening.
Currently, the main challenge facing airlines is fuel prices. The Russo-Ukrainian conflict has pushed oil prices to around USD 165/barrel, much higher than the USD 65-70/barrel before the pandemic and way above the USD 80/barrel price predicted in Vietnam Airlines’ 2022 Business Plan. Furthermore, the airline was forced to reroute its flights to Europe and the United States, which increased fuel costs to nearly 45% of our total operating costs, making it difficult to balance our finances.
To make matters worse, inflation around the world has been rampaging to various degrees, coupled with the depreciation of strong currencies such as the Euro, Japanese Yen, and South Korean Won, affecting Vietnam Airlines’ revenues in key international markets. Other factors may also hold back travel demand, such as rising unemployment rates, new variants of Covid-19, and the potential return of the monkeypox epidemic. All of this could threaten the aviation industry’s recovery.
To deal with these difficulties, Vietnam Airlines has prepared different operational scenarios based on the overall economic recovery, individual living conditions, and passengers’ budgets.
Interviewer: What are the next main steps Vietnam Airlines will take to accelerate the recovery and development process?
Chairman Dang Ngoc Hoa: The highlight of Vietnam Airlines’ post-pandemic recovery roadmap is that we have completed and submitted our comprehensive proposal to restructure the Corporation in the 2021-2025 period to competent authorities. In this proposal, Vietnam Airlines provided many feasible solutions to quickly recover, improve business performance, and achieve financial balance by restructuring our asset and investment portfolio to increase revenues and cash flow; issue shares to increase equity; and streamline our personnel. We have also been actively implementing an organizational streamlining roadmap that shows our willingness and flexibility to adapt, and has brought initial positive results.
In addition, absolute safety is the top priority and basis for Vietnam Airlines’ recovery and development. We are always striving to enhance service quality and continue our “Uplifting Service” campaign, aiming to achieve 5-star standards in services and human resources.
In these trying times, we understand that adaptation and perseverance are key to overcoming difficulties and remaining in the top position as a national flag carrier. With great ambition comes great determination and actions. With the Government’s support and passengers’ trust, Vietnam Airlines firmly believes in our bright future and is readily overcoming any challenges on the path to recovery and development.
Thank you very much for your time. 
