Why did Pacific Airlines stop flying for months?

Pacific Airlines, the first low-cost airline in Vietnam, has been going through a difficult period that led to a suspension of flights for several months in 2024.

In 1991, Pacific Airlines was established with state-owned shareholders. In 2007, Qantas Group bought 30% of Pacific Airlines shares, leading to the name change to Jetstar Pacific. Then, in 2012, SCIC transferred 68% of its capital to Vietnam Airlines . In July 2020, the airline regained its original name, Pacific Airlines.

Pacific Airlines is the first low-cost airline in Vietnam. The airline has been going through a difficult period for a long time, leading to a suspension of flights for many months in 2024.

Financial reports show that Pacific Airlines has been making continuous losses for 3 years after the Covid-19 pandemic, with accumulated losses by the end of 2022 reaching more than VND10,700 billion and negative equity of VND6,700 billion.

In March 2024, Pacific Airlines was forced to temporarily suspend flights due to a lack of aircraft to operate. The airline had to return all leased aircraft under an agreement with a foreign ship owner after negotiating to cancel a debt of more than 250 million USD.

This is the first time in the history of Vietnam's aviation industry that an airline has a license to operate air transport but does not operate any aircraft.

After a period of restructuring efforts, Pacific Airlines officially resumed flight operations on June 26. The airline said it would operate domestic routes connecting Ho Chi Minh City with Hanoi , Da Nang and Chu Lai with a frequency of 6-8 flights per day.

Pacific Airlines is not the only case of having to cut the size of its fleet.

Previously, Bamboo Airways – an airline that once operated up to 30 aircraft and held nearly 20% of the domestic passenger transport market share at its peak not long ago – had to return 22 aircraft early.

This airline currently only operates about 8 narrow-body Airbus 320 and 321 aircraft, while the minimum size for an airline to be profitable is about 30 aircraft.

Summer peak but still few passengers
Currently, the 2024 summer peak season has begun, but the domestic aviation market has recorded a low average booking rate. According to data from the Civil Aviation Authority of Vietnam, in the period from June 15 to July 15, 2024, the average booking rate on flights from Hanoi and Ho Chi Minh City to localities reached over 50% on the days leading up to and over the weekend (June 15 - June 17). This figure drops to only 20% - 40% for further days.

However, some popular tourist routes recorded significantly higher booking rates. For example, flights from Hanoi to Quy Nhon, Phu Quoc, Nha Trang; Ho Chi Minh City to Nha Trang, Dien Bien all had booking rates of over 70% on June 15 and 16. Similarly, flights from localities with famous tourist destinations to Hanoi and Ho Chi Minh City also had high booking rates, such as Nha Trang - Hanoi, Hue - Hanoi, Quy Nhon - Hanoi, Dong Hoi - Ho Chi Minh City.

To stimulate market demand, Vietnamese airlines have even launched many attractive promotional programs with diverse prices, many of which are significantly lower than the prescribed maximum price.

For example, round-trip fares (excluding taxes and fees) for the Hanoi - Phu Quoc route range from VND 2.7 million (Vietnam Airlines) to VND 3.4 million (Vietjet Air), equivalent to 69% - 87% of the maximum price.

Source: https://congthuong.vn/vi-sao-pacific-airlines-ngung-bay-suot-nhieu-thang-328601.html