FINAL REPORT the impact of COVID 19 on the demand, supply, and market price of the aviation sector in vietnam

VIETNAM NATIONAL UNIVERSITY, HANOI UNIVERSITY OF LANGUAGES AND INTERNATIONAL STUDIES ******* ENGLISH FOR ECONOMICS FINAL REPORT The impact of COVID-19 on the demand, supply, and market price of the aviation sector in Vietnam Student’s name: Le Thi Thao Van Student ID: 18061276 Class: BK - ENG 3072 - 01 Hanoi, 2022 Table of Contents Abstract 1 Introduction Conceptual background 2.1 Aviation 2.2 The role of aviation in economic development 2.3 Demand factors 2.4 Supply factors Analysis 3.1 Impacts of Covid - 19 on the demand side 3.2 Impacts of Covid - 19 on the supply side 3.3 Impacts of Covid - 19 on price fluctuations 10 3.4 Impacts of Covid - 19 on revenues 12 Recommendation 14 4.1 Vietnam’s aviation development target 14 4.2 Solutions to restore and develop Vietnam's aviation 15 Conclusion 20 Reference list 21 Abstract Since the end of 2019, the SARS-CoV-2 strain has become a horrible obsession of the whole world because it has swiftly expanded throughout population communities and devastated practically every element of not only the economy but also social life For economies, the Covid-19 pandemic has caused difficulties for all actors involved in the economy, from large corporations to enterprises, and affects the employees directly involved in the production and business processes of enterprises The aviation sector is expected to be one of the businesses most affected by this epidemic The objective of this study is to analyze the damage after many waves of COVID-19 on the demand, supply, and market price of the aviation sector in Vietnam In general, the COVID-19 pandemic’s impact on the aviation industry in Vietnam is a big concern, which may require a timely economic policy response and financial scheme to better support aviation enterprises in coping with the challenges during post-pandemic recovery Key words: Vietnam's Aviation, Covid - 19, demand, supply, market price Introduction Vietnam is the world’s seventh fastest-growing aviation market Aviation generates huge revenue for destinations and contributes to overall economic development for a plethora of countries, especially the nations dependent on international trade In other words, there is a strong link between aviation industry development and economic growth, which also stimulates the development of other related businesses and sectors in a country However, aviation is a vulnerable industry that may crash due to potential risks such as global pandemics (Shakya 2009) In the service sector, there are many affected industries in the first group, which is the aviation industry, whose estimated influence rate is 100% (GSO, 2020) A report by the International Civil Aviation Organization (ICAO) showed that global air passenger numbers will drop by 68% in 2020 due to countries closing borders and restricting travel Only 1.8 billion passengers chose to travel by plane, compared with 4.5 billion in 2019 The number of flights dropped sharply in March and April 2020 According to IATA, the global airline industry's passenger transport activity in September 2020 fell 72.8% year-on-year Figure 1: Number of commercial flights globally from January to December (2018 – 2020) (Source: General Statistics Office) In Vietnam, the COVID-19 pandemic and its impact on the aviation industry are major concerns due to multiple lockdowns imposed since 2020 Aviation activities in Vietnam in general particularly fell into a state of crisis and almost total paralysis until March 2021 Most of the services and activities associated with transportation, domestic and foreign transportation were stopped or interrupted, which led to devastating consequences, including a loss of revenue for the aviation industry and a loss of jobs for workers From June 2020, the domestic tourism industry started to recover; however, with the impact of the next waves of COVID19, the situation once again became a struggle, with a difficult economic recovery from the pandemic anticipated The Civil Aviation Administration of Vietnam (CAAV), the agency under the Ministry of Transport (MOT) that regulates the aviation industry, provided that the number of air passengers in Vietnam likely dropped by 46% to 43 million and Vietnamese carriers lost more than $1.3 billion or worse in revenues This report aims to also approach different research directions and methods to analyze the influence of the Covid-19 pandemic on the aviation sector in Vietnam, recognize the challenge they are facing in aviation, and identify strategies to overcome short and long-term challenges 2 Conceptual background 2.1 Aviation According to research by Edwin D Phillips and Robert W Kaps (2005), aviation is defined as the knowledge and practice related to the use of an airborne vehicle for commercial, research, military or charity in the earth's atmosphere Aviation is a transport economic field that applies modern and high-tech techniques with highly international activities, associated with safety and security, forcing synchronous operations in a tight process 2.2 The role of aviation in economic development There is no denying that the aviation industry is the engine of economic development One of the main reasons for this importance is the globalized nature of the industry, helping to connect different continents, countries, and cultures As a result, global aviation has been key in facilitating efficient travel to distant places, enriching many lives in the process As a driving force for socio-economic development, the growth of the regional aviation industry plays an essential role in the markets and locally in which it operates Regional aviation will not only improve connectivity between major cities to Vietnam's lower-density locations but also promote Vietnam's international connectivity to regional and global destinations The key point of the aviation industry in economic growth and its limitless potential is evident in the industry's achievements before the COVID-19 pandemic The aviation industry has also been a key contributor to global economic prosperity, not only as a result of the tourism industry boosting local economies but also because it has allowed for improvements in global trade The aviation industry plays an important role in driving the growth of the tourism industry, especially in developing countries Aviation carries billion passengers a year, 40% of international tourists now travel by air The air transport industry creates a total of 29 million jobs globally 70% of businesses reported that using airline services is inevitable to serve a large market Air travel accounts for 10% of total trade revenue, generate a significant source of foreign currency revenue, and has a relatively good impact on the economic situation of countries Domestic and international trade activities are being promoted to expand according to the trend of globalization, leading to the growth of the air transport system, specifically accounting for 40% of inter-regional goods export turnover The impact of aviation on the global economy is estimated at $2,960 billion, equivalent to 8% of the world's GDP The International Air Transport Association (IATA) showed that the air transport industry including airlines and supply chains contributes an estimated $2.6 billion to Vietnam's GDP Spending by international visitors contributed an additional $9.9 billion, bringing the total to $12.5 billion Revenues from the air transport sector and international visitors arriving by air accounted for a total of 5.2% of the country's GDP According to the IATA report, the air transport industry has supported 2.2 million jobs Airlines, airport operators, airport businesses (restaurants and retailers), aircraft manufacturers, and flight assurance service providers employ 42,000 people in Vietnam In addition, by purchasing products and services from local suppliers, the industry has also supported an additional 174,000 jobs Furthermore, the aviation industry is estimated to support an additional 182,000 jobs through employee wages As a result, part or all of these wages will be spent on consumer goods and services International visitors to Vietnam by air are estimated to support an additional 1.8 million jobs through expenditures that contribute to the local economy This sector will play an important role in creating economic value by creating high-value and skill-demanding job opportunities, thereby contributing to the growth of the economy in our country With its major contribution to the economy, the aviation industry is the catalyst of sectors including (but not limited to) commerce, tourism, and social development Thanks to the positive impact of the aviation sector, other industries will also see a long-term productivity boost 2.3 Demand factors Economists use the term demand to refer to the quantity of a good or service that consumers are willing and able to buy at different prices in a given time, assuming other things are constant In this relationship, price means what a buyer pays for a unit of the specific good or service, also called the independent variable Quantity demanded is the total number of units purchased at the price - is the dependent variable Assuming all other things are constant, the quantity of a good or service demanded in a given period of time will increase when the price falls and conversely, will decrease when the price increases Here are some typical factors affecting demand: First, the price of goods and services affects the quantity demanded according to the law of demand When the price of goods and services increases, the quantity demanded of goods and services decreases and vice versa The second factor is the price of related goods Two groups of related goods affect the quantity demanded of the goods under study: substitutes and complements The next factor is consumer income According to Engel's law, consumers will have different conceptions of the same good with different income levels Engel divides goods into two categories: (i) Goods for which, as income increases, the quantity demanded of the good increases; When income falls, the quantity demanded of a good is called a normal good (ii) Commodities when income increases, the quantity demanded of goods decreases; When income falls, the quantity demanded of a good increase is called a secondary good Moreover, the taste is the preference or interest of a group of people about certain goods and services that affect consumer psychology Taste determines the type of goods that consumers want to buy Besides, the number of buyers reflects the size of the market The more consumers in the market, the greater the demand for goods and services The fewer consumers in the market, the smaller the demand for goods and services 2.4 Supply factors Supply is the quantity of a good/service that sellers are able and willing to sell at different prices in a given period of time assuming other things constant (ceteris paribus) Meanwhile, quantity supply reflects the quantity of a good or service that sellers are willing and able to sell at different prices during a given period of time, assuming other things remain constant Some factors that affect supply, including: The price of goods and services affects the quantity supplied according to the law of supply When the price of goods and services increases, producers will produce more goods to put on the market to earn more profit and vice versa The prices of products directly affect the cost of production and thus the quantity of a good that producers are willing to sell Government policies such as legal policy, tax policy, and subsidy policy all have a strong impact on the quantity supplied When government policy favors producers, producers are encouraged to produce, causing the quantity supplied to increase and the supply curve to shift to the right and vice versa The number of sellers has a direct effect on the number of goods sold in the market When there are more sellers, the quantity supplied increases, causing the supply curve to shift to the right and vice versa Analysis Before the pandemic happened, Vietnam's aviation market was considered a "gold" market The Civil Aviation Administration of Vietnam shows that the air transport market continuously has high growth, with an average growth rate of 20.5% in passengers and 13.2% in cargo (period 2014 - 2018) In 2019, the growth rate will continue to be maintained at double digits with a growth rate of 11.8% in passengers and 3% in cargo compared to 2018 Total passenger transport reached 78.3 million passengers and freight reached more than 1.25 million Not only the growth in tourists, but Vietnam's aviation also increased by 11% compared to 2018 in terms of goods (1.5 million tons) According to the International Air Transport Association (IATA), Vietnam is recognized as one of the fastest growing aviation markets in the world and the fastest in Southeast Asia with an average growth rate of 15.8%/year It is expected to achieve an average growth rate of over 10% in the next years and reach 150 million passengers transported by 2035 The COVID-19 pandemic is having an enormous impact on the aviation industry, affecting passenger traffic, air cargo demand, price fluctuations, and incoming revenues 3.1 Impacts of Covid - 19 on the demand side The order to restrict flights, social distance, and social isolation to prevent the spread of the COVID-19 epidemic has caused many international and domestic flights to close The aviation industry is one of the industries that have suffered the most damage under the impact of the Covid-19 pandemic, the volume of air transport has continuously decreased deeply, specifically compared to the same period in 2019; Domestic visitors decreased by 24%, leading to many negative impacts on the production and business activities of enterprises in the industry In the first months of 2020, the number of passengers transported by air only reached 22.5 million passengers, decreasing 45.5%, and rotated 25.4 billion passengers, down 55.9%; freight transportation reached 196.6 thousand tons, decreasing 39.4% and 2.6 billion tons, decreasing 54.2% Figure 2: Air passenger transport in the months of 2019 and 2020 (Thousand passengers) (Source: General Statistics Office) Specifically, according to the General Statistics Office, international visitors to Vietnam in the first 10 months of 2020, were estimated at more than 3.8 million arrivals, down 73.8% over the same period last year Statistics of the National Administration of Tourism show that in the first 10 months of 2020, domestic tourists reached 42.5 million (down 41% over the same period in 2019) After ceasing international and domestic flights at the end of March, the number of passengers in April decreased by 88%, and in May, the number of passengers dropped sharply by 91% With the reopening of domestic routes from April 23, 2020, the number of passengers has gradually improved, however, until July 28, passenger flights to/from Da Nang were requested to be temporarily suspended exploitation (due to the appearance of a new positive case in Da Nang) has reduced the number of passengers in transit From September 8th, flights to/from Da Nang will be opened, and the number of passengers will gradually increase, but still at a very low level compared to the same period last year due to international flights (accounting for about 60% of the total number of passengers rotated transfers of Vietnamese airlines in 2019) have not yet been reopened With the complicated development of the epidemic, domestic and international arrivals fluctuated greatly According to the Ministry of Transport, in 2020, the volume of goods through Vietnam's airports is estimated at 1.3 million tons, down 15.6 % The reason is due to the trade situation, the fluctuating supply and demand of goods due to the COVID19 epidemic, and the restriction of air transport activities to prevent the spread of the disease Figure 3: Vietnam's air cargo volume in the period 2009-2020 (Source: Ministry of Transport) This is the first negative growth since 2009, but lower than the sharp decline of the transportation and passenger services segments The cargo terminal service segment is least affected by the COVID-19 epidemic as cargo planes are still maintained to ensure the supply of goods and maintain production and business activities in the world Accordingly, in the first months of 2020 net revenue of the cargo terminal segment decreased by 8.2% due to the decrease in cargo volume due to the COVID-19 epidemic Gross profit margin decreased compared to previous years because businesses had policies to support airlines such as supporting cargo storage fees for delayed, canceled flights and other related activities 3.2 Impacts of Covid - 19 on the supply side At that time when the Covid epidemic was the most complicated and dangerous, the price of services in the aviation sector dropped to the bottom As a result, airlines were forced to close many routes and reduce the number of domestic and international flights In the first 10 months of 2020, according to data from CAAV, the total number of flight transfers made by airlines was 185,870 flights, down 30.5% over the same period in 2019 The strongest decrease belonged to Jetstar Pacific with 13,711 flights, down 54% Vietnam Airlines and VietJet Air also decreased by 24.7% and 39.1%, respectively In contrast, Bamboo Airways is the only airline with a growth in the number of flights with 21,339 flights, up 48% over the same period in 2019 Figure 4: Number of flights by Vietnamese airlines in the first 10 months of 2019 and 2020 (Source: Civil Aviation Authority of Vietnam) Besides, the market share of airlines also changed significantly Specifically, Vietnam Airlines has surpassed VietJet Air to return to the leading position in the aviation industry with 39.6% market share, up 3.1 percentage points over the same period last year Meanwhile, VietJet Air only accounts for 37.6% of the aviation market share, down 5.3 percentage points over the same period Besides, Bamboo Airways continues to show strong growth in the business when increasing its market share to 6.1 percentage points over the same period in 2019 and reaching 11.5% market share, becoming the second largest airline on the market According to the Airports Corporation of Vietnam (ACV), in May 2021, the total number of takeoffs and landings at Noi Bai and Tan Son Nhat airports dropped to a record low On May 23, Tan Son Nhat airport had 173 flights; Noi Bai airport had 101 flights - while on May 26, Tan Son Nhat only had 122 flights and Noi Bai airport only had 92 flights The data shows that the pandemic had a substantial negative impact on flight volumes for a prolonged period; this had a massive knock-on effect on global business and travel and tourism 3.3 Impacts of Covid - 19 on price fluctuations After waves of epidemics with serious impacts on the economy and social life, the price situation in the aviation industry also experienced unpredictable fluctuations The number of passengers passing through the airports has dropped to a record level, and airfares have also hit the bottom for many months in the context of the complicated developments of the Covid-19 epidemic in many localities The system of many airlines such as Vietjet, Vietnam Airlines, Bamboo, Pacific Airlines and Vietravel Airlines has recorded the cheapest fares for the Ho Chi Minh City - Hanoi tours departing in early June 2021 Some airlines sell tickets including taxes and fees of less than 500,000 VND/way; Popular prices include taxes and fees from about 450,000 - 800,000 VND/way For example, at Vietjet, a series of tickets priced at 49,000 VND/way are open for sale for the whole trip between Ho Chi Minh City and Hanoi, excluding taxes and fees Starting in June is also very cheap, from only 450,000 VND/trip including taxes and fees 10 Figure Vietjet Air ticket price list in August and September 2021 (Source: Vietjet.net) At that time, Vietnam Airlines opened the sale of preferential tickets on most domestic routes with unprecedented prices, from only 39,000 VND (equivalent to 613,000 VND including taxes and fees) for short flights and 99,000 VND (equivalent to VND 613,000) equivalent to 679,000 VND including taxes and fees) for a long flight Pacific Airlines also sells air tickets for only 9,000 VND/way (equivalent to 580,000 VND including taxes and fees) throughout its domestic flight network The program applies to tickets purchased and departed from now until June 30 In general, airfares on the routes between Ho Chi Minh City to Hanoi, Da Nang and Phu Quoc have fallen sharply compared to the previous period and almost bottomed for many months To protect people's health, the Government has implemented policies to restrict entry and close borders between countries to prevent the maximum spread of 11 Coronavirus Due to the increasingly complicated epidemic situation, many airlines have to announce that they will suspend some international and domestic routes They offer policies to support customers through ticket refunds and flexible flight changes according to the epidemic situation 3.4 Impacts of Covid - 19 on revenues The severe effects of the COVID-19 pandemic are also reflected in the business results of airlines and air service businesses According to IATA, the Covid19 pandemic caused aviation industry revenue to drop by 80% in the first half of 2020, while still having to cover costs related to crew, maintenance, fuel, airport fees, and aircraft maintenance The International Air Transport Association (IATA) forecasts that the world passenger volume in 2021 will only be 33% compared to 2019 The loss of airlines is estimated to reach 95 billion USD, nearly double compared to the forecast in December 2020 The speed of recovery depends on how successful countries are in deploying COVID - 19 vaccines Bui Doan Ne, Vice President cum General Secretary of VABA showed that due to the heavy impact of the COVID-19 epidemic in 2020, Vietnamese airlines have suffered a loss of over 18,000 billion VND from transportation activities and revenue decreased by about 100,000 billion VND compared to 2019 The financial report for the third quarter of 2020 showed that Vietnam Airlines' net revenue from sales and service providers continued to decline sharply, equaling 1⁄4 compared to the same period in 2019 Gross profit recorded a loss of 3,200 billion VND, in the same period last year, the profit was equivalent to 3,300 billion VND After deducting expenses, Vietnam Airlines recorded a loss of 3,942 billion VND in the same period in 2019 and recorded a profit of 1,506 billion VND In the months of 2020, Vietnam Airlines recorded a loss of 10,504 billion VND Total revenue and other income in the third quarter of 2020 of the parent company decreased by 66%, of which domestic passenger revenue decreased by 34,8%, and international revenue dropped sharply by 95.4% In addition, subsidiaries related to providing aviation services also saw a sharp drop in profits such as Vacs, Vigas VietJet Air had to face the industry's general difficulties when it also announced less satisfactory business results in the first months of 2020 with a loss 12 after tax of 971 billion VND Airline service businesses are also not immune to losses or reduced profits However, the situation still has more optimistic signals than airlines Specifically, Noi Bai Aviation Catering JSC (NCS) lost 26 billion VND, Taseco Aviation Services JSC (AST) lost 32 billion VND, Cam Ranh International Airport Services JSC (CIA) lost 10 billion VND, and JSC Airport Services Da Nang (MAS) lost billion VND These are all units facing difficulties throughout 2020, some providing direct services to flight passengers, others operating at local airports when the number of international arrivals nears zero Airports Corporation of Vietnam (ACV), which manages and operates 20 airports across the country, recorded a profit of 156 billion VND, down 94% over the same period Saigon Ground Services Joint Stock Company (SGN) also decreased at the same rate, making a profit of only billion VND Figure 6: Profits of airlines in the first months of 2020 (billion VND) (Source: FiinPro) The least affected by the pandemic hit are businesses providing cargo services at airports because they are typically not affected as badly as passenger transport Profit before tax of Noi Bai Commodity Services Joint Stock Company (NCT) in the third quarter of 2020 reached VND 69 billion, down 8%; while Saigon Cargo Services JSC (SCS) reached 124 billion VND, down 9% Relatively severely affected groups include Tan Son Nhat Airport Services Joint Stock Company (SAS) and ASG Group Joint Stock Company (ASG) which lost 50-60% of their profit in the third quarter of 2020 13 In general, 2020 and the first half of 2021 are difficult years for Vietnam's aviation industry Vietnam's aviation industry experienced a period of explosive growth from 2013 to 2016 However, 2020 is also the first year to witness a decline in Vietnam's aviation industry since Vietnam's integration into the world economy The recovery and re-development of the aviation industry still depend heavily on the epidemic situation, the speed of vaccination, and the plans and policies of enterprises and the government Recommendation In 2019, the international aviation industry is one of the main driving forces for the world's development, connecting countries, and territories because this industry created 87,7 million jobs, contributing 4,1% of global GDP In Vietnam, the aviation industry plays a connecting role between our country and the world, directly promoting tourism development, to which the tourism industry contributes 8,8% of the country's GDP To recover the aviation industry, Vietnam needs to take appropriate measures based on the solutions that the world aviation industry is effectively implementing 4.1 Vietnam’s aviation development target It is because of the specific nature that the aviation industry is hardest hit by the shutdown of globalization due to the travel restrictions caused by the COVID-19 pandemic However, the industry is forecast to be the first and fastest to recover from the crisis because of its importance to economies around the world Therefore, experts say that the aviation industry must be completely ready when the pandemic is over Airports Corporation of Vietnam (ACV) determines specific tasks in the period 2021 to 2025: Firstly, production and business targets: Based on the situation that the covid19 epidemic in the world is brought under control and control in 2021, the average annual growth rate will reach: 11-13%/year Passenger service output; 12 - 15%/year Output serving goods; 10 - 12%/year; Number of landings and take - offs; 13 15%/year of revenue; 18 - 20%/year Profit before tax 14 Secondly, the plan for investment development, management, and operation: By 2025, ensure new investment, upgrade, expand, effectively manage and exploit 23 airports with a designed capacity of 173 million passengers/ year With a population of about 100 million people and one of the fastest growing economies in Southeast Asia, Vietnam needs to increase the capacity of its aviation industry to meet its planned air transport demand, in line with the country's projected economic growth of 6,4% between 2021 and 2030 Despite continuing to be affected by the COVID-19 pandemic, the aviation industry began to show signs of recovery by the end of 2021 thanks to a nationwide vaccination program and strict prevention regulations The fight against COVID-19 is strictly implemented to ensure safe operation and protect the health of passengers and crew From the above positive signals, IATA forecasts that in 2022, the domestic aviation market will recover about 93% The plan to recover the domestic market in Vietnam is 96%, higher than the average forecast The International Air Transport Association (IATA) reported that just released in early March 2022, the aviation market will fully recover with the total number of passengers expected to reach billion by 2024, surpassing the period before the COVID-19 outbreak According to the assessment of the leader of the Civil Aviation Authority of Vietnam, the Government has decided to reopen international commercial routes from February 15 to restore trade and tourism and reopen tourism from March 15, 2022 In addition, the gradual loosening of COVID-19 prevention and control has created favorable conditions for international passenger transport to be smooth and domestic passenger transport to be restored, contributing to an increase in output international passenger and cargo transportation in the first quarter of 2022 4.2 Solutions to restore and develop Vietnam's aviation • The direction and support of the Government and Departments Firstly, due to business stagnation, the biggest and most serious problem that airline businesses are facing during this period is financial problems The Government should develop specific policies to remove difficulties for the aviation industry and review, and properly handle the law on discounts, fees, charges, and expenses of the aviation industry In addition, to save the aviation industry from this burden, in addition to providing relief packages, the state should implement policies to exempt or reduce import tax, environmental protection tax on jet fuel, reduce or 15 suspend corporate income tax, personal income tax, foreign contractor tax for transactions taking place during the epidemic period The Government needs to direct the Ministry of Transport to allow the extension of the time to reduce 50% of the fees for take-off and landing services and flight control services along with the time to apply the minimum price of VND for services, specialized aviation services on the list of state-specified price brackets until the end of 2021 The Ministry of Planning and Investment believes that the Ministry of Finance needs to amend Decision No 87 on margin trading conditions to allow airlines and businesses directly affected by COVID-19 Accordingly, these businesses will not be cut off from margin trading when their profits are negative for two consecutive quarters Currently, the Government has solutions to support businesses such as exemption and reduction of some taxes and fees The State Bank also promptly issued directives for commercial banks to develop supporting policies enterprises, restructuring debt sources and reducing loan interest These policies are put in place to ensure cash flow to maintain production recovery and restore services Actively responding to the policy of the Government and the State Bank of Vietnam (SBV), to support the business community to overcome difficulties caused by the Covid-19 pandemic, recently, Saigon - Hanoi Bank (SHB) was one of three commercial banks to sponsor Vietnam Airlines Corporation – Vietnam Airlines with a total credit limit of 4,000 billion VND This is one of the specific and practical actions that SHB has continuously implemented since the outbreak of the epidemic, to stand together with customers and the community to cope with difficulties Accordingly, three banks including Saigon – Hanoi Bank (SHB), Southeast Asia Bank (SeaBank), and Maritime Bank (MSB) pledged to finance loans for Vietnam Airlines with a total amount of 4,000 billion VND from the refinancing source of the State Bank, in which, SHB sponsored a credit limit package of 1,000 billion VND The most important thing is that firms need to get low-interest loans, followed by tax and fee exemptions and reductions The Ministry of Planning and Investment is also drafting a document to propose the Prime Minister direct the State Bank to study and submit to the Government for promulgation a mechanism to support interest rates of about 4% for credit loans in 2021 - 2023 for financial institutions 16 Airlines to help private airlines settle liquidity, and maintain resources to operate and develop after the Covid-19 epidemic Secondly, as soon as the epidemic situation is under control and domestic and international flights are reopened, departments should step up the implementation of national tourism promotion activities In particular, the focus should be on coordinating with professional associations in tourism to develop and implement a program to stimulate domestic tourism, strengthen communication and promote new products to attract international tourists, focusing on strongly developing domestic tourism in regions and regions of the country Vietnam needs to strengthen communication about safe tourism and a friendly and responsible national image associated with positive results in COVID-19 prevention and control, which is highly appreciated by international organizations and communities Thirdly, the Government needs to promote vaccination and vaccine passport issuance Currently, compared to other countries, Vietnam has a low vaccination rate Right in Southeast Asia, as of June 9, 2021, Vietnam is the last country in the process of vaccination against COVID-19 Figure 7: Vaccination rate chart in Southeast Asian countries (%) (Source: VNVC) Therefore, the Government as well as the Ministry of Health need to actively negotiate with other countries, to quickly access the source of COVID-19 vaccine and promote the supply of the best vaccine to the Vietnamese people In addition, the Government can proceed with a plan to provide vaccine passports to vaccinated citizens to people who have been vaccinated It is easier for people to travel to other countries without needing to be quarantined 17 • Plans for the aviation industry and aviation enterprises First, the world's volume of goods transported by air is expected to recover at a faster rate than other forms of transport The reason is that companies promote air freight to quickly meet increased consumer demand after the epidemic With the recovery of world trade and cargo flights still operating, passenger planes are used to transport goods Airlines cannot increase the conversion of passenger aircraft to cargo aircraft to increase revenue Secondly, before the negative effects of COVID-19 on the revenue of the aviation industry, the policy of reducing personnel has been applied by airlines However, this measure will lead to inevitable consequences in the future, which is costly and timeconsuming to recruit and train qualified new employees This also adversely affects business activities in the post-pandemic period The proposed solution is not to make staff reductions, but to give employees quarterly rotating leave Thus, there is no need to recruit or train new employees while ensuring the quality of employees for future business activities Third, expand domestic and international flight markets During the epidemic period, the measure of reducing flight routes was applied by airlines, but this seriously affected the revenue of airlines Faced with that situation, the proposed solution is to exploit new flight routes in the future, when the epidemic is under control With the current trend of restructuring, the domestic service tourism industry is on a strong development momentum, the domestic routes are completely potential markets In addition, international flight routes also need to be researched and exploited more, especially in countries that have good disease control In the long term, the need to move between countries and territories is increasing, not decreasing Based on the latest report from CarTrawler in collaboration with IdeaWorks Company, the results confirm that the Covid-19 pandemic has significantly changed the way the aviation industry operates in many aspects in the long term Airlines need to focus their research on prospects coming from a core product, which is the destination Therefore, the airline's exploitation of routes after the pandemic wave cannot ignore potential destinations Vietnam Airlines has actively launched a stimulus program in all three areas: domestic, and international visitors to Vietnam (inbound), and Vietnamese people 18 traveling abroad (outbound) Accordingly, the airline is committed to reducing domestic fares by up to 50%, focusing on routes with great demand to increase efficiency The airline is also promoting the plan to open a direct route to India, and continue to expand its flight network to Australia because these are two potential destinations, determined to focus on promoting shortly Fourth, improving the service quality Besides expanding the market, improving service quality plays an important role in the development of the aviation industry It can be seen that when the global pandemic ends, people's travel needs will increase rapidly In that situation, Vietnamese airlines urgently need to ensure and improve service quality such as expanding terminals and airports, upgrading infrastructure to overcome overload; strengthen the development of utilities for passengers, such as applications to support ticket purchase, flight tracking, update information about canceled flights or promotions and promotions of airlines Moreover, upgrading the boarding process will help passengers feel more secure, and touchless technology is an effective choice that needs to be applied at airports such as contactless check-in, purchasing contactless shopping and payment, touchless baggage claim, According to the leader of the Civil Aviation Authority of Vietnam, solutions on taxes, fees and prices are extremely necessary To handle this problem, businesses can raise their charter capital by issuing shares In 2021, Vietnam Airlines offered 800 million shares to existing shareholders to increase charter capital As a result, this business does not suffer from negative equity, helping the company to supplement capital for production and business activities and cover cash flow deficit, supporting liquidity Last but not least, the Civil Aviation Authority of Vietnam needs maximum and practical support so that businesses can transform, restructure the market, and even convert aircraft from passenger to cargo The overall corporate restructuring plan for the 2021-2025 period is expected to be a key solution to help aviation businesses improve operational efficiency, strengthen financial capacity, and gradually recover and prepare resources to develop after the epidemic is under control, emphasized the leader of Vietnam Airlines Specifically, the restructuring plan was developed by aviation enterprises in all fields, including solution groups such as fleet restructuring; capital restructuring 19 through issuing more shares to increase charter capital, raising capital from outside, issuing bonds; develop different scenarios to manage production and business while continuing to promote freight transport to increase revenue, to quickly recover and break through the post-COVID-19 period, thereby contributing to development socio-economic of the country Conclusion There have been devastating effects of the global Covid-19 pandemic on all countries, not only affecting health but also negatively affecting the economy and social security The COVID-19 pandemic has inflicted serious and widespread impacts on a wide range of economic sectors, particularly the aviation industry The stagnation in operations, especially the negative effects on the demand, supply, and market price of the aviation industry are heavy losses for this sector and restrain the Vietnamese economy When the epidemic is under control, the aviation industry needs to soon recover and develop again Support during the epidemic is important, but to recover the economy, the support after the epidemic is decisive In which, it is important to provide long-term support, not only tax and fee exemption and reduction, but also the establishment of routes, flight operations and especially loans for airlines to supplement the lack of capital lost during the temporary shutdown due to the epidemic to restore production and business This report is not without its limitations, based on objective data available with the understanding and knowledge gained from the subject of English for economics The solutions suggested in the report are only from a personal perspective and have not been censored by any organization To sum up, we also believe and look forward to the recovery and development of Vietnam's aviation industry after the Covid 19 pandemic 20 REFERENCE LIST Czerny, A I., Fu, X., Lei, Z., & Oum, T H (2021) Post pandemic aviation market recovery: Experience and lessons from China Journal of Air Transport Management, 90, 101971 Dube, K., Nhamo, G., & Chikodzi, D (2021) COVID-19 pandemic and prospects for recovery of the global aviation industry Journal of Air Transport Management, 92, 102022 GSO (2020) Report the influence of Covid-19 on enterprises Retrieved from: 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Virtual Economics, 3(4), 91-105 Smith, K M., Machalaba, C C., Seifman, R., Feferholtz, Y., & Karesh, W B (2019) Infectious disease and economics: The case for considering multisectoral impacts One Health, 7, 100080 10 Tisdall, L., Zhang, Y., & Zhang, A (2021) COVID-19 impacts on general aviation – Comparative experiences, governmental responses and policy imperatives Transport Policy, 110, 273–280 21 Tài liệu Tiếng Việt Đặng Anh Tuấn (2020), Vực dậy ngành hàng không sau đại dịch Covid-19, Tạp chí Cộng sản Lan Chi (2021), Khủng hoảng ngành hàng không bão dịch, Báo Điện tử Đảng Cộng sản Việt Nam Thái Phương (2021), Nhu cầu giảm mạnh, giá vé máy bay chạm đáy, Báo Người lao động Tổng công ty Cảng hàng không Việt Nam (2020), Báo cáo thường niên năm 2020 Tổng công ty Cảng hàng không Việt Nam (2020), Phương hướng, mục tiêu, nhiệm vụ giai đoạn 2020 - 2025 22 ... many waves of COVID- 19 on the demand, supply, and market price of the aviation sector in Vietnam In general, the COVID- 19 pandemic’s impact on the aviation industry in Vietnam is a big concern,... effects on the demand, supply, and market price of the aviation industry are heavy losses for this sector and restrain the Vietnamese economy When the epidemic is under control, the aviation industry... different research directions and methods to analyze the influence of the Covid- 19 pandemic on the aviation sector in Vietnam, recognize the challenge they are facing in aviation, and identify strategies