Ministry urges Hanoi to help ailing airlines following China spat

The ministry sent a report to the Prime Minister Nguyen Tan Dung detailing losses suffered by Vietnamese airlines over the last few months, Deputy Transport Minister Pham Quy Tieu, said.

The ministry called for tax on jet fuel imports to be reduced from 7 per cent to 3 per cent, and the loosening of visa requirements for a number of important markets, including Germany, France, Britain and India.

Beijing and Hong Kong authorities issued a travel warning for Vietnam after anti-China protests led to riots in several industrial zones in May, which Hanoi said left three Chinese workers dead. The riots broke out after Beijing deployed an oil-drilling platform to waters also claimed by Vietnam. 

Nearly 1,500 return flights between Vietnam and China, Hong Kong and Taiwan have been cancelled from mid-May until October, causing losses of around US$137 million (Bt4.4 billion), the ministry’s report said.

National carrier Vietnam Airlines was the worst hit, with 13 routes cancelled to 12 destinations in China from mid-May until the end of October. It currently flies only to Beijing, Shanghai and Guangzhou. The company reported more than 42,000 seat cancellations, equivalent to 170 flights, or a loss of over $9 million in revenue. 

Other companies like the Viet Nam Air Traffic Management Corporation and the Airports Corporation of Vietnam suffered losses in fees from foreign airlines after China Southern Airlines, Spring Airlines, Hong Kong Airlines and Uni Air cancelled 230 return flights from mid-May until October. Flights from China, Taiwan and Hong Kong have fallen 34 per cent compared to last summer. To reduce dependence on the Chinese market, the Transport Ministry told Vietnam Airlines to develop intercontinental air routes, including direct flights to India beginning in summer 2015.