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Vietnam’s aviation market heats up in 2019
The Hanoitimes – The Vietnamese aviation market is currently considered to be very attractive when growing well in the past decade.
Competition in the Vietnamese fast-growing air transport market is expected to intensify further this year as more entrants are joining the market.
With the launch of its first flight on January 16, FLC Group-backed Bamboo Airways has become Vietnam’s fifth airline. FLC Group has positioned Bamboo Airways as a hybrid airline, blending low-cost traits with those of traditional or full-service carriers to meet the demands of every market segment.
Bamboo Airways is ambitiously eyeing 37 routes connecting major cities and tourist destinations at home and abroad in 2019. The first domestic routes will be Ha Noi-Quy Nhon, Ha Noi-Dong Hoi, HCM City-Quy Nhon, Ha Noi-HCM City, and HCM City-Van Don. Up to 60 domestic flights per day are planned.
The airline also considers international service using widebody jets to Asian countries this year, starting with Japan, South Korea, and Singapore and later to European destinations.
Besides Bamboo Airways, the Vietnamese market is also expected to see the appearance of the sixth airline this year as Air Asia – the largest low-cost carrier in Southeast Asia – has recently signed a memorandum of cooperation with regional travel group operator Thien Minh Travel and seaplane operator Hai Au Aviation to create a new low fare airline. The joint venture has applied for its aviation license in February before launching flights in August this year.
Thien Minh Travel CEO Tran Trong Kien said the new airline will initially operate a fleet of five or six Airbus A320s and A321s from and to domestic and regional destinations. The airline could expand its fleet to as many as 30 airplanes within three years.
Another newcomer – tourism company Vietravel Group – has recently also made the first moves to establish its own airline, sending documents on establishing Viettravel Airline to the central province of Thua Thien-Hue’s Department of Transport. The headquarters of Viettravel’s airline is forecast to be in the province.
According to experts, the fresh entrant will face stiff competition from low-cost carrier Vietjet Air, which has grown rapidly since 2011 to become the largest airline in Vietnam, holding 45 percent of the local market.
Besides Vietjet Air, state-run Vietnam Airlines, Jetstar Pacific and Vietnam Air Services Company (VASCO) dominate the remaining share.
Fruitful market
The Vietnamese aviation market is currently considered to be very attractive when growing well in the past decade. The International Air Transport Association (IATA) reported it is one of the hottest markets in the world with an average revenue growth of 17.4 per cent over the past ten years, compared with the 7.9 per cent average rate of the Asia-Pacific region.
Air transport demand will double or even triple in the future so that Vietnam really needs new airlines, said Tran Trong Kien, CEO Thien Minh Group, said.
According to analysts, market outlook for aviation companies is also positive in 2019.
VNDirect Securities Co. (VNDS) forecast aviation firms will benefit from continued rise in the number of international visitors to Vietnam and higher domestic travel demand amid increasing leisure spending and lower average airfares.
“After clocking phenomenal growth rates in the past five years, air passenger traffic is expected to grow by around 10 percent per annum in 2018-2021 and moderate to around 7 percent in 2021-2025,” the VNDS report states.
Also, private investors eyeing airport infrastructure investment opportunities in Vietnam as recent rapid passenger traffic grows, has created stresses and strains on the country’s aviation infrastructure, according to VNDS.
“Rapid growth and the huge potential of the local aviation industry have whetted the appetites of private investors to jump into airport infrastructure, especially given limited government resources to fund infrastructure expansion.”
Source: http://www.hanoitimes.vn/economy/2019/02/81E0D392/vietnam-s-aviation-market-heats-up-in-2019/