According to the leaders of the VNR, due to the COVID-19 epidemic, from February to May, the VNR reduced the operation of 2,886 trains; after the epidemic temporarily subsided, the occupancy rate on trains was only about 56%.
The number of passengers on board was less than 30% of capacity over the same period, while revenue in the first six months of 2020 only accounted for 69.4% over the same period last year. In the past six months, the railway sector has lost more than VND450 billion.
According to General Director of the Hanoi Railway Transport Joint Stock Company Nguyen Viet Hiep, although some parts of passenger transportation recovered after social distancing, the company’s passenger transport revenue only reached 25% of the figure for same period last year.
In July and August, the end of the school year was identified by the VNR as a “golden time” to take advantage of the number of tourists and increase revenue. From June, along with preferential policies, the company has implemented many flexible discount policies with price reductions from 15 to 50%. The company also coordinated travel agents to launch promotional programmes for domestic tourists.
According to the Chairman of the VNR Vu Anh Minh, over short and medium routes such as Hanoi - Quang Binh, Hanoi - Lao Cai, Saigon - Nha Trang, the railway sector still has advantages compared to other means of transport. Over recent times, the sector has focused on domestic tourists to maintain its operations. With the segment increasingly narrowing, railway companies are tending to gradually decrease long-haul passenger trains due to ineffectiveness, and focus on long-haul freight transport with special commodity materials such as cement, petroleum, iron ore, coal and cargo routes to China, as well as looking for new markets and customers.
After a short pause, the COVID-19 epidemic broke out again with a greater degree of complexity. At the same time, VNR is also facing another difficulty as a project on improving and upgrading the North-South railway is being implemented, affecting the train schedule. The construction of the project will reduce train capacity through the whole north-south route by about 30% compared to that at present.
The project is expected to be completed by the end of June next year, but the current reality shows that it is difficult to ensure this progress. Minh expressed his concern that if the project is delayed for six more months, the railway sector will lose revenue of about VND1 trillion and at least VND2 trillion after a year of delay.
With fierce competition from other means of transport, especially airlines, while the railway infrastructure system is increasingly degraded and service quality has not met demand, the decrease in train passenger numbers is understandable.
It can be seen that no matter how much effort us made, it will take four to five years for the railway industry to partly recover. The slow recovery of businesses will certainly affect the collections of the State budget, so the State should consider and establish post-epidemic support packages, as well as take into account specific policies for the railway sector.
The VNR has proposed the Government exempt or reduce the fee for the use of railway infrastructure in 2020 and 20% off rental fees for the use of railway infrastructure in 2020; to extend by three years the life of railway vehicles according to the roadmap to reduce the pressure on the cost of investing for new locomotives and wagons.
In order to replace expired locomotives and wagons, the VNR needs about VND7 trillion This is a big difficulty because by the end of 2020, railway transport enterprises will have been seriously affected by the epidemic.
In the context of the heavy damage to the railway industry, the VNR is expected to receive practical support from State management agencies, authorities at all levels as well as the Government to help it revive production and stabilise the lives of workers.