Essay: COVID-19 Impact on Vietnamese Tourism and Aviation Industry

Introduction
The coronavirus disease (COVID-19) originating in Wuhan is considered a nightmare of the globe causing crises all over the world. Despite the outstanding country that handled the epidemic successfully, Vietnam has suffered numerous severe consequences on all fronts, and tourism is not an exception. Transportation in tourism, especially aviation, which has to face significant challenges and losses is moving towards radical solutions as soon as the epidemic is reversed.
Background information
Prior to Corona pandemic, travel and tourism had grown to be one of the most important economic sectors in the world. In January 2020, Vietnam’s tourism promoted the high growth momentum of the 2016-2019 period with nearly 2 million international visitors, the highest level in history (Vietnam National Administration of Tourism, 2021). However, from March 2020 when Covid-19 rapidly spread with the increasing number of deaths, the global tourism industry was drastically interrupted because governments of countries had issued regulations on national lockdowns and restrictions on home and international travel. According to the World Tourism Organization (UNWTO) as of April 2020, 45% of global tourist destinations had closed all or part of their borders, and 30% of countries introduced measures to restrict or prohibit domestic or foreign air flights.
Effects of COVID-19 on aviation industry
In Vietnam, during 2 consecutive years 2020 and 2021, 90% of tourism businesses in the hotel, motel, restaurant and transportation sectors were postponed due to nationwide closure orders in directives 15, 16, and 19 on Covid epidemic prevention. The aviation industry was one of the most severely affected when an array of domestic and foreign flights to Vietnam and vice versa were cancelled (Figures and Events Review of the General Statistics Office, 2021). For instance, owning to the re-emergence of the epidemic and city-wide isolation policy, all flights to/from Da Nang were stopped from July 28 to August 11, and many other domestic routes were also influenced. The Civil Aviation Authority of Vietnam evaluated that the initial damage of the suspension of flight routes of Vietnamese airlines due to Covid-19 was up to more than 10.000 billion VND.
Moreover, travel restrictions and the decreasing demand for air transport by both home and international tourists have been proportional to the substantial decline in flight frequency, consequently, the revenue of aviation enterprises in 2020 and the first 5 months of 2021 decreased by 61% compared to 2019. Due to the complicated pandemic outbreak and social distancing, in 2020, the number of foreign travellers and domestic visitor trippers dropped respectively by 78.7% and 34.1% (General Statistics Office of Viet Nam, 2021). More specifically, travelling by air which accounts for 80.8% of international arrivals to Vietnam, reduced sharply by nearly 70% compared to the previous year. For example: in 2020, Vietnam Airlines’s passenger volume was estimated at 14.23 million, going down 51% compared to 2019 (Vietnam News Agency, 2021).
Measures
The recovery of the aviation industry depends entirely on the ability to control the Covid-19 epidemic. In the new normal, Vietnam’s aviation industry has had a remarkable recovery thanks to the government’s policies. Since January 2022, the government promptly issued policies to reopen “tourism, air transport, entertainment, cultural and art services in association with epidemic safety”. After that, the relaxation of isolation regulations for visitors on entry, especially the lifting of Covid-19 testing requirements (from May 15, 2022) has created favorable conditions for international airlines’ recovery. Regarding monetary policy, the National Assembly has approved a credit support package of 12 trillion VND to help the national airline – Vietnam Airlines, to offset liquidity and escape the risk of bankruptcy. The State Bank also suggested that commercial banks give priority to airlines to take loans as well as reduce lending interest rates. In addition, the environmental protection tax reduction policy for airlines is applied exclusively to the aviation industry.
Recommendations
It is estimated that by 2024 the Vietnamese aviation industry will recover to its pre-epidemic status if COVID-19 is under control. In terms of foreign visitors, the government also needs to establish regulations on service price competition when airlines launch new international routes, thereby helping them effectively promote and develop their brands in the international market.
Vietnam’s tourism industry needs to focus on stimulating domestic markets. Currently, the travel demand of domestic tourists is vastly increasing, so airlines need to promote cooperation with travel agencies to offer preferential air ticket combos or attractive promotions for groups when travelling both within and outside our country. Moreover, airlines focus on bettering customer care services to give customers the best experience. Recruiting and fostering human resources needs to be identified as both an urgent and long-term strategic solution towards the goal of sustainable development.