Fierce competition grips Vietnam's aviation market
HANOI (Viet Nam News/ANN) - The race to win aviation market share in Vietnm is heating up with Bamboo Airways, a subsidiary of FLC Group, recently receiving approval from the Ministry of Transport (MoT) to expand its fleet to 30 aircraft.
The MoT said following transport business practices, an airline needed to have a fleet of at least 25–30 planes to operate stably and efficiently, leading to its support for the airline increasing its fleet from 10 to 30 by 2023.
However, it also asked the Civil Aviation Authority of Vietnam (CAA) to work with agencies to assess the budget carrier’s fleet expansion plan while taking into account the aviation market’s growth until 2030, the capacity of existing airports, and the availability of the CAA’s aviation safety monitoring personnel.
According to the plan for development of air transport in the period to 2020 with a vision to 2030 approved by the Prime Minister, the aviation sector targets average growth of 16 per cent per year from 2015-20, and 8 per cent per year from 2020-30.
These targets translate to the country welcoming 117 million guests per year by 2023; of which Vietnamese airlines are expected to transport approximately 85 million. In order to transport 85 million passengers, Vietnamese airlines will need 340 aircraft by 2023.
Vietnam Airlines and Jetstar Pacific Airlines plan to operate 155-160 aircraft by that time, while Vietjet Air expects to have 102-106 aircraft (averaging 9-10 new aircraft per year).
The number of aircraft operated by other airlines is planned to be 74-83.
The MoT's decision to allow Bamboo Airways to expand will almost certainly increase competition within the industry.
The International Air Transport Association (IATA) said Vietnam had become one of the world’s most developed aviation markets over the past decade with average revenue growth of 17.4 per cent, more than double the rate of Asia at 7.9 per cent.
Ho Quoc Cuong, head of the Air Transport Department under the CAAV, said in the past five years (2014-2018), the aviation market had witnessed high growth in terms of passengers and cargo.
It is therefore unsurprising to see competition among aviation firms heat up in the race for domestic market share.
The largest market share currently belongs to Vietnam Airlines Group (including Vietnam Airlines, Jetstar Pacific and Vasco). Data from CAAV reported in 2018 Vietnam Airlines and member firms reached over 28 million passengers, accounting for 56 per cent of the market share. Vietjet Air's transport volume reached over 21 million passengers, accounting for 44 per cent market share.
With regards to aviation management, at a recent meeting Prime Minister Nguyen Xuan Phuc said Vietnam's aviation industry had prospered with the birth of new airlines, meeting the increasing travel demands of the people and creating competitive benefits for customers.
However, the PM also said there were still problems threatening aviation security and safety, while service quality was not guaranteed (many delayed and cancelled flights) and unfair competition was creeping in.
The PM assigned the MoT to assess the aviation sector's capacity and take measures to develop the industry in line with planning, infrastructure and human resources capacity.
PM Phuc also instructed airlines to operate in accordance with their approved business plans and to establish an airport base to avoid congestion or overloading at airports. In addition, the Minister of Transport would be responsible to the Government and the PM for ensuring aviation security and safety.