Vietnam air travel is on the road to recovery

Vietnam's domestic air travel has returned to normal operations since 2022, thanks to improved immunization.

Recovery of domestic air traffic

Domestic air traffic demand has risen dramatically since the second part of January 2022, helping domestic flight frequency reach 70% of prepandemic levels in January 2022, before reaching 92 percent of prepandemic levels by the end of February 2022. As a result, domestic pax levels in 1Q22 had recovered to 87 percent of their pre-pandemic levels (1Q19).

Domestic travelers are now not needed to carry certificates of negative COVID-19 test results unless they are traveling from a province with a pandemic level of 4. People will be able to travel by air more easily as a result of this.

Mr. Nguyen Tien Dung, VNDirect's analyst, believes that, with the provinces' tourism stimulus initiatives in place, Vietnam's domestic air traffic would rebound and surpass pre-pandemic levels in 2022. Domestic passengers are expected to rise 137.0 percent year on year in FY22F, as the country returns to "normalcy" with recovering travel demand. Domestic passenger traffic is predicted to increase 15.8% year over year in FY23F, then dropping to 7.9% or 8.3% year over year in FY24–25F. According to VNDirect, Vietnam's domestic passenger traffic could surpass pre-pandemic levels in FY22F (103 percent of FY19 base) and 139.5 percent of FY19 base in FY25F.

International tourism as a driver

In the next years, foreign tourism will be critical to the recovery of Vietnam's international air traffic. According to Google Destination Insights, the volume of worldwide searches for Vietnam aviation and tourism has remained quite strong since the beginning of 2022. From January 1, 2022 to February 2, 2022, total searches grew by 72.8 percent year over year.

Vietnam abolished limit s on the frequency of international flights on February 15, 2022. Vietnam has fully resumed international air traffic until March 15,2022, with (1) the number of regular routes nearly returning to prepandemic levels (90 percent), (2) the prepandemic visa policy being restored, and (3) international tourists only needing to validate their Covid-19 test results and medical insurance. In comparison to the pre-pandemic period, eight countries, including Brunei, India, Indonesia, Myanmar, Macao, Finland, Italy, and Switzerland, have yet to reopen regular flight links with Vietnam. International passenger shipments increased 176.2 percent year on year to 321,000 pax in 1Q22, bringing them to 4.7 percent of their pre-pandemic level (1Q19).

The revival of Vietnam's international tourism is contingent on the destination country's admission requirements. Some Southeast Asian countries, including Thailand, Singapore, and Malaysia, have reduced entry criteria and begun to promote bilateral tourism with Vietnam. Korea will similarly reduce entry requirements in East Asia starting on January 1, 2022, but Japan requires a 3-day quarantine and China demands a 14-day quarantine. As a result, depending on each bilateral tourist agreement with a country, VNDirect created three possibilities for the recovery of foreign traffic:

In VNDirect's base case, air traffic between Vietnam and Southeast Asia will rebound strongly from 2Q22F as a result of the tourism promotion, followed by Korea, Europe, Japan, and the United States in 3Q22F, Taiwan and Russia's tourism promotions in 4Q22F, and China's tourism promotion in 1Q23F. In the base case, it anticipates foreign passenger numbers in Vietnam to reach 12.2 million in FY22F (up from 0.5 million in FY21) and to rise by 222.5 percent or 11.7 percent yoy in FY23-24F. Vietnam's international passenger traffic is expected to fully recover to pre-pandemic levels in FY24F (105.0 percent of FY19 base) and reach 119.2 percent of FY19 base in FY25F, according to the report.