Vietnamese aviation market under double pressure

The Vietnamese aviation market grew slowly in the first half of 2019, falling far short of the double-digit average growth in 2013-2018.

vietnamese aviation market under double pressure
The Vietnamese aviation market is beset by the growing number of airlines and poor infrastructure

Since the end of 2018, the Vietnamese aviation market welcomed new players including Bamboo Airways which officially took off in January 2019, Vietravel Airlines, Vinpearl Air, or Thien Minh Airlines, which is right now dealing with the licensing procedures, making the Vietnamese sky more crowded.

However, the real growth of the aviation industry has been decelerating recently.

According to data from the Civil Aviation Authority of Vietnam, in the first half of 2019, the whole aviation industry had 153,559 flights, a slight increase of 2.4 per cent on-year. Of this, domestic airlines transferred 20.2 million domestic passengers (up 12.5 per cent) and 18.3 million international passengers (up 6.2 per cent).

However, these numbers mean the growth of the Vietnamese aviation market is slowing down, according to Phu Hung Security (PHS). The company also assumed that the country's aviation market will continue slowing down due to the falling number of international passengers while the domestic passenger market is plateauing out. Along with that, the aviation facilities of the country lack synchronous development, keeping the industry from developing.

In addition, the giants in the aviation industry might have to share the market with latecomers.

According to the Vietnam National Administration of Tourism, the number of international passengers arriving to Vietnam in the first half of 2019 reached 8.4 million. The number of passengers travelling by airway recorded a slower increase of only 4.8 per cent. Meanwhile, the figures for the first half of last year were 27 per cent increase in international visitors to Vietnam and 22.2 per cent increase in passengers travelling by airway, while the figures were 29.1 per cent in 2017 and 26 per cent in 2016.

China and South Korea account for more than half of the total number of international passengers to Vietnam. The number of Chinese visitors decreased by 3 per cent, affecting the tourism industry and the aviation market.

Not only Vietnam, tourism across Southeast Asia took a hit from fewer Chinese passengers. The second-largest economy of the world being under pressure might impact the growth of the tourism industries in the Indochina region.

The number of Asian visitors to Vietnam reached 7.6 million, accounting for 77 per cent. Visitors from Europe made up 13 per cent, while 6 per cent hailed from the Americas, and 1 per cent from Australia.

 

Overloaded and rundown aviation facilities

Another issue is that the country's aviation facilities are not at a level to match the growth of the industry. The two international airports, Noi Bai and Tan Son Nhat, have been receiving more passengers than their designed capacity in recent years. The number of visitors in 2018 passing through the two international airports was 38.5 and 26.1 million, much higher than their 28 and 25 million capacity.

This leaves the facilities in a serious state of degradation. Runways 25R/07L of Tan Son Nhat and 1B of Noi Bai both have cracks because they have to accommodate far more aircraft taking off and touching down than their designed capacity.

In the near future, the number of passengers will continue to increase – albeit at a slower pace – while the capacity of the two most important airports cannot. And the road infrastructure connecting to neighbouring airports remains problematic at best. Therefore, the closure of these runways for repair or upgrade would heavily affect the operations of air transport companies.

In addition, there are new players diving into aviation, further increasing pressure on infrastructure. According to experts, the number of aircraft might reach 380 in 2023-2025, almost twice as much as the current 197.

In the past, the aviation market maintained a growth of nearly 20 per cent per year. This impressive number also created favourable conditions for Vietjet to join the low-cost niche, breaking the monopoly of Vietnam Airlines.

However, the appearance of new aviation businesses has made the market narrower. According to experts, since beginning operations, Bamboo Airways has been eating into the profits of the two giants, seizing 4 per cent of the market with ambitions to reach 30 per cent. VIR

Tan Duong

Vietnam’s aviation market heats up with new carriers

Vietnam’s aviation market heats up with new carriers

Vietnam will catch up with Thailand in the number of domestic air carriers, just second to Indonesia, when all air carriers that have applied for a license begin operation.

Aviation, tourism to spur central Vietnam's economic development

Aviation, tourism to spur central Vietnam's economic development

Experts all agree that the development of the aviation industry with more airports and air routes put has helped change the central region.

 
 

Other News

.
Thai billionaire, European brewer lose money in Sabeco investment deal
Thai billionaire, European brewer lose money in Sabeco investment deal
BUSINESSicon  16/10/2020 

The Sabeco price has seen a strong recovery in the last half a year, but is still at a low price. Both Thai billionaire and the big brewer Heineken have lost money because of the drop in Sabeco share price.

State firms more resilient than foreign, Vietnamese private companies: survey
State firms more resilient than foreign, Vietnamese private companies: survey
BUSINESSicon  15/10/2020 

Business resilience is highly correlated with level of digitisation, the Business Pandemic Resilience Diagnostic conducted by Grant Thornton...

Pandemic a test of fire for Vietnamese enterprises
Pandemic a test of fire for Vietnamese enterprises
BUSINESSicon  15/10/2020 

The COVID-19 pandemic has been a test for Vietnamese businesses as many have been and will be struggling to recover for the foreseeable future. 

Five expy projects unlikely to attract private investors
Five expy projects unlikely to attract private investors
BUSINESSicon  15/10/2020 

Although the National Assembly Standing Committee has given its approval to switch three of the eight subprojects of the North-South Expressway from the public-private partnership (PPP) format into wholly State-invested, 

Only 5% FDI projects in Vietnam use high technologies
Only 5% FDI projects in Vietnam use high technologies
BUSINESSicon  15/10/2020 

Vietnam is home to 32,539 valid foreign direct investment (FDI) projects with registered capital of a combined US$381 billion, of which US$233 billion has been fully disbursed.

The Vietnamese brain will decide
The Vietnamese brain will decide
FEATUREicon  16/10/2020 

"Vietnamese have nothing but brains to develop the country in the future." 

Vietnam banking sector to suffer in 2020 before rebounding in 2021
Vietnam banking sector to suffer in 2020 before rebounding in 2021
BUSINESSicon  15/10/2020 

Fitch Solutions expected credit growth to weaken to 7% in 2020 from 13.7% in 2019, but the growth is predicted to pick up to 12% one year later.

Realising revised growth ambitions
Realising revised growth ambitions
BUSINESSicon  15/10/2020 

Vietnam’s fourthquarter economic outlook is brighter on the back of a rise in domestic consumption and public investment.

Businesses line up for further support
Businesses line up for further support
BUSINESSicon  15/10/2020 

Continued facing with massive woes, the business community in Vietnam is in dire need of the government’s assistance for investors and enterprises to struggle through the global health crisis and grabbing new business

Infrastructure development at the centre of PPP decree direction
Infrastructure development at the centre of PPP decree direction
BUSINESSicon  16/10/2020 

Further clarifying the legal framework for infrastructure development via wider participation of private investors is expected to help the country attract more funding into the industry.

Gov’t support aids automobile industry
Gov’t support aids automobile industry
BUSINESSicon  14/10/2020 

The domestic automobile industry was forecast to thrive, given the Government’s supports in tax policies for imported automobile components coupled with the increasing income of citizens.

Digital economy and fintech see growth amid COVID-19
Digital economy and fintech see growth amid COVID-19
BUSINESSicon  15/10/2020 

The Prime Minister’s Economic Advisory Group met with the local fintech firm MoMo in HCM City on Monday.

Vietnam Airlines reports huge losses
Vietnam Airlines reports huge losses
BUSINESSicon  14/10/2020 

Vietnam Airlines Group, listed as HVN on the HCM Stock Exchange, earned nearly VND24 trillion (US$1.04 billion) in total consolidated revenue in the first nine months of this year, marking an estimated loss of VND10.75 trillion, 

Vietnam to increase imports of coal and gas
Vietnam to increase imports of coal and gas
BUSINESSicon  14/10/2020 

The latest data from the ministry sent to the National Assembly shows that Viet Nam is transitioning from an energy exporter to a net importer.

Coastal developers prepare for good upcoming times
Coastal developers prepare for good upcoming times
BUSINESSicon  14/10/2020 

In anticipation for the world eventually opening back up for travellers, developers are exploring the high potential of Vietnam’s world-renowned coastal urban areas.

Tax relief should not be “One size fits all”
Tax relief should not be “One size fits all”
BUSINESSicon  14/10/2020 

The Private Economic Development Research Board, under the Advisory Council for Administrative Procedure Reform, has proposed a 30% reduction in corporate income tax for all businesses this year.

Big investors pour money into IZ projects as land fund declines
Big investors pour money into IZ projects as land fund declines
BUSINESSicon  15/10/2020 

The land rent in some industrial zones in Hai Phong, Bac Ninh and Hai Duong has increased by 20-30 percent.

Vietnam urged to develop night-time economy
Vietnam urged to develop night-time economy
BUSINESSicon  14/10/2020 

Vietnam has missed some economic development opportunities and should not ignore the chance to grow the night-time economy, according to economist Tran Dinh Thien.

Tra fish swimming back to local market
Tra fish swimming back to local market
BUSINESSicon  14/10/2020 

Turning away from the uphill battle in exports due to COVID-19, tra fish producers have set an eye on the domestic market.

Investors find VN ports, logistics attractive
Investors find VN ports, logistics attractive
BUSINESSicon  13/10/2020 

With its annual growth of 12-14 per cent, the logistics sector, especially seaports, is becoming attractive to both domestic and foreign investors,...

 
 
 
Leave your comment on an article

OR QUICK LOGIN