Hanoi (VNS/VNA) - The Ministry of Transport has proposed the Governmentincrease support for domestic airlines which were heavily hit by the COVID-19pandemic.

Policiesincluded tax and fee postponements as well as credit support.

Thenational carrier Vietnam Airlines in which the State holds the controllingstake, was the only airline to get approval from the National Assembly andGovernment for a loan package worth 4 trillion VND with a preferential rate.The rate would be equivalent to the lowest rate of debts that Vietnam Airlinesraised in the market and the interest would be paid in stocks.

AfterVietnam Airlines received the Government’s support, two private airlines,Vietjet and Bamboo Airways, despite reporting profits in 2020 both called forsimilar support .

Vietjetproposed a loan package worth 4-5 trillion VND with a loan term to 2023 andrate of around four percent interest per year.

BambooAirways asked for a loan worth around 10 trillion VND. Bamboo expected theGovernment would raise mechanisms for commercial banks to provide the airlinewith long-term loan worth 5 trillion VND while the rest of 5 trillion VND wouldbe provided via refinancing at zero interest rate.

Accordingto Pham The Anh, chief economist of the Vietnam Economic and Policy Research,if the credit support was provided to Vietnam Airlines, similar support shouldalso be provided to other domestic carriers to create a fair playing field,providing they met the same requirements as Vietnam Airlines.

However,Anh said that support for aviation enterprises should be in the form of issuingshares to take advantage of the stock market rather than providing preferentialloans which should be considered the last choice.

CanVan Luc, member of the National Financial and Monetary Advisory Council, saidthat credit support policies must be fair among all carriers.

Accordingto the Vietnam Aviation Business Association, although private carriersreported aggregated profits last year, they all suffered losses in the aviationtransportation business, at an estimated sum of more than 18 trillion VND intotal.

Theassociation predicted the aviation market would continue to have problems thisyear and that domestic airlines might face losses of more than 15 trillion VND coupledwith the risk of cash flow exhaustion. Domestic airlines needed theGovernment’s support, the association said.

Besidesnew loans with preferential rates, the association also proposed Governmentreduce rates of existing loans by around two percent together with debtrestructuring and payment postponements.

Furthercuts on environmental protection tax for fuel was also proposed from 2,100 VNDper litre to 900 – 1,000 VND till the end of 2021./.