Vietnam airline industry’s recovery hurt by declining demand

Slower recovery in international markets and lower demand in domestic air travel are hindering the recovery of Vietnam’s airline industry, say industry insiders and policymakers. “Economic downturn, inflation and exchange rate fluctuation are all contributing factors to consumers’ tightening spending, which has resulted in lower demand in key markets including Japan, South Korea and China,” said Dinh Viet Thang, director of the Civil Aviation Authority of Vietnam (CAAV). According to statistics from the Vietnam National Administration of Tourism, in the first nine months of 2023, air travel between Vietnam and Japan, and Vietnam and South Korea, had only recovered to 80% of pre-pandemic levels. Meanwhile, economic slowdown and visa policies have also been significantly hindering the recovery of the Chinese market at just 17% of pre-pandemic levels. This had a much bigger-than-expected impact on Vietnam’s airline industry as China has become one of the largest tourism markets in recent years. In addition, according to a report by domestic airlines, the first three quarters of 2023 saw a drop in revenue generated from chartered flights to just under 10% of the same period in 2019.<br/>