Vietnam aviation service providers earn big in Q3

Businesses providing aviation services in Vietnam reported profits in the third quarter of 2023 many times higher than the same period last year thanks to the industry's strong recovery.

The Tan Son Nhat Airport Service Co.,Ltd (Sasco), registered on the Unlisted Public Company Market (UPCoM) as SAS, reported revenue of VND714 billion ($29 million) in Q3, an increase of 72% year-on-year. Its gross profit doubled to VND423 billion ($17.2 million), with gross profit margin increasing from 52% to 59.2%.

The company’s revenue from financial activities rose from VND5 billion to VND40 billion ($1.63 million). Even though sales and management costs nearly doubled, Sasco still reported an after-tax profit of VND131 billion ($5.33 million), 3.7 times higher than the same period last year.

In the first nine months, Sasco’s net revenue and after-tax profit hit VND1.89 trillion ($76.9 million) and VND241 billion ($9.8 million), both double year-on-year, but lower than the same period in 2019 before the Covid-19 pandemic.

Sasco provides duty-free services, business class lounges, airline meals, sleep zones, restaurants and department stores at airports. It also delivers car rental, resort booking, and Phu Quoc bus tour services.

The Saigon Ground Services JSC (SAGN), listed on the Ho Chi Minh Stock Exchange (HoSE) as SGN, announced that its Q3 revenue rose by 76% to VND394.6 billion ($16 million) and after-tax profit was 2.4 times higher than the same period in 2022 at VND72.3 billion ($2.94 million).

The respective nine-month figures reached VND1.09 trillion ($44.34 million) and VND203 billion ($8.26 milion), up 56% and 86% year-on-year.

The company attributed the sharp increase in revenue and profit in Q3 to the strong recovery of services for international routes. It also signed more service supply contracts with a number of new customers and increased service fees for some existing customers compared to the same period in 2022. Besides, its subsidiary SAGN-CXR saw good profit.

SAGN supplies domestic and international airlines with services such as aircraft loading and unloading, ramp transport for baggage, cargo and mail, ramp transport for passenger and crew load control, and flight operations support.

Specializing in providing meals at Hanoi-based Noi Bai International Airport and Cat Bi International Airport in Hai Phong city, Noi Bai Catering Services JSC (UPCoM: NCS) also recorded very impressive business results in Q3, with post-tax profit expanding 36% to VND11.6 billion ($472,000).

It saw a profit of VND30.2 billion ($1.23 million) in the first nine months from a loss of VND3.2 billion in the same period last year.

While aviation service providers reported profits in Q3, those engaging in air passenger transport including Vietnam Airlines (HoSE: HVN), Bamboo Airways, and Vietravel Airlines continued to suffer losses even though the pandemic was controlled.

Vietnam Airlines has not yet announced its Q3 financial statements. However, according to the Commission for Management of State Capital at Enterprises, the national flag carrier may have a pre-tax loss of over VND4.5 trillion ($183 million) in 2023.

Vietnam Airlines’ Q2 financial statements showed that in the first half, the airline suffered a loss of VND1.2 trillion ($48.8 million). In the second half, it is forecast to incur an even bigger loss.

CEO of Vietravel Airlines Vu Duc Bien said Vietnamese airlines are yet to return to profitability despite a strong recovery in passenger transport post Covid-19 as airfares are still too low to cover costs.

According to Bien, while fuel (fixed) makes up 20-35% of total costs, other variable costs such as engineering, departure and arrival flight operation services, aircraft landing and taking off, parking chargers, check-in counter rental, premises, and warehouses at airports account for about 65-80%. Therefore, cutting or reducing costs would not improve the situation that much.

Bien held that carriers are the core of the aviation industry but are vulnerable and unstable, while other businesses in the ecosystem such as airports and catering and ground services providers are operating quite well thanks to specific policies and mechanisms.

Therefore, the government should take measures to regulate the aviation sector, including the organization of a forum for stakeholders to contribute ideas to increase the competitiveness and sustainability of airlines, he noted.

According to the Civil Aviation Authority of Vietnam (CAAV), the total number of passengers through airports reached 89 million in the first nine months of 2023, a year-on-year increase of 20%. They included 23.7 million foreigners and 65.2 million domestic passengers, up 266.8% and 3.6% respectively compared to the same period last year. Meanwhile, freight transport by air decreased by 15.3%, reaching 887,500 tons.

Five Vietnamese airlines, namely Vietnam Airlines, Vietjet Air, Bamboo Airways, Vietravel Airlines and Jetstar Pacific, currently operate 67 routes with over 650 flights per day in the domestic market. In addition to increasing the frequency of existing routes, the airlines have launched a number of new routes such as Can Tho-Van Don and Hanoi-Ca Mau.

In the international market, in addition to traditional markets and some new markets in Central Asia like Kazakhstan, Uzbekistan, and Turkmenistan, Vietnamese airlines have also launched flights to India and Australia.

However, private carrier Bamboo Airways has started halting a series of international routes to South Korea, Japan, Thailand, Australia and Germany from October 29 in its latest effort to stay afloat.