VN aviation industry seeks private investment amid explosive growth

The booming aviation sector in Việt Nam needs investment from the private sector to ensure that it has adequate airport infrastructure for continued...

VN aviation industry seeks private investment amid explosive growth

A rendering of the proposed Long Thanh International Airport in the southern province of Dong Nai, which is still in the preparation process, with the first stage set to be completed in 2025. — Photo courtesy of Airports Corporation of Viet Nam

The booming aviation sector in Viet Nam needs investment from the private sector to ensure that it has adequate airport infrastructure for continued expansion, experts have said.

With double-digit growth over the last five years, the sector is under pressure because of the rising number of airlines and aircraft now operating in the market.

The five airlines that operate in Viet Nam are Vietnam Airlines, VietJet Air, Jetstar Pacific Airlines, Vasco and Bamboo Airways. However, Viet Nam will need about 10 airlines in the near future to meet demand, according to economists.

Another airline, Vietstar Airlines, recently received approval from the Civil Aviation Authority of Viet Nam (CAAV) for an air operator’s certificate (AOC.

CAAV has also confirmed AOC applications submitted by Vinpearl Air and Vietravel Airlines.

Vinpearl Air said it expected to have a fleet of six aircraft by July and 30 more by 2025 for both domestic and international routes.

Meanwhile, Vietravel Airlines said it hoped to commence operations this year with three aircraft and five more by 2025.

Quang Nam Province’s Department of Planning and Investment has also filed an application for its local airline KiteAir.

The busiest domestic route is the HCM City – Ha Noi busy route, which is operated by Viet Nam Airlines, Jetstar Pacific and VietJet Air. It accounts for 22.7 per cent of air ticket sales in the country last year, according to CAAC.

Flights connecting the country’s two major economic hubs have reached over 90 per cent of seat capacity. As a result, terminals and runways at the two airports have operated over capacity for years.

Legal issues and complex aviation regulations have also slowed down much-needed repair work. In addition, new airlines have had to find bases elsewhere instead of Noi Bai or Tan Son Nhat.

Bamboo Airways is reportedly basing its operations at Phu Cat Airport in Binh Dinh Province, while KiteAir will be at Chu Lai Airport in Quang Nam Province, and Vietravel Airlines at Phu Bai Airport in Hue City.

Airlines are also facing more scrutiny because of their desire to add more aircraft to their fleets.

CAAV reportedly turned down Bamboo Airways’ request to add 30 more aircraft in April, citing an inadequate number of air traffic controllers to safely monitor flights. It also reduced Vinpearl Air’s plan to add 36 aircraft by 2025 to 30 planes.

Because of the crowded market, airlines are competing by offering quality services and international routes.

CAAV estimates that by 2030 there will be 600 aircraft operating in Viet Nam, three times the country’s current number.

In addition to the foreseeable rise in air operators and aircraft, highly skilled human resources are also expected to be in high demand. To fill positions, airlines are also poaching technicians and pilots from their competitors.

Overloaded airports

According to CAAV, local airlines last year served nearly 50 million passengers, up by 10 per cent over 2017, and 400,000 tonnes of cargo, up by 27.2 per cent. As of June, Vietnamese airline fleet totalled 197 aircraft, up by 30 compared to 2018.

Vietnam Airlines operated 95 aircraft and employed 1,135 pilots, of which 860 are Vietnamese. Vietjet Air, Jetstar Pacific and Bamboo Airways operate 65, 15 and 6 aircraft, respectively.

Vietjet Air now uses 60 airplanes and has ordered about 100 aircraft a year in the last two years.

 

The air transport market includes 63 foreign airlines from 25 countries and territories, which provide routine flights to and from Viet Nam.

Air carriers have plans to expand their fleets, but aviation infrastructure has not kept up with the expansion rate.

Also, the presence of new airlines is expected to put pressure on airport infrastructure. Seven out of 22 airports are now overloaded, according to CAAV.

The issue is most serious at Tan Son Nhat airport in HCM City where 38.5 million arrivals were welcomed last year, far higher than its annual design capacity of 28 million.

The airport faces long queues for aircraft to take off. Every day, it receives some 700 flights, with the figure reaching over 900 on peak days.

A third passenger terminal was initially expected to open in the second quarter of 2022, but is expected to run behind schedule because of administrative procedures.

In addition, the development of the Long Thanh International Airport in the southern province of Dong Nai is still in the preparation process, with the first stage set to be completed in 2025.

Airports also face a shortage of slots for flights. CAAV, in its report to the Ministry of Trade, says there is a dramatic shortfall in its slot allocation plan for flights in the 2019-20 period.

During this period, Vietnam Airlines wants an additional 140 flight slots a day, while Vietjet, Jetstar Pacific, and Bamboo Airways want 180, 100, and 26, respectively.

Private investment

Economist Vo Tri Thanh said the private sector should be encouraged to invest in the sector to ensure a competitive market, while Dr Tran Du Lich, member of the Prime Minister’s Economic Advisory Group, said that state management agencies must be responsible for administrative problems.

“There should be no excuse for a lack of infrastructure that would limit the operation of new airlines,” he noted.

Dr Tran Dinh Thien, former head of the Viet Nam Economics Institute, said that development of the aviation sector must be based on market demand, especially if Viet Nam wants to take advantage of tourism.

“For years, aviation development has depended too much on state investment. The example of Van Don airport shows that the private sector can do a good job if supported by the Government. The State needs to have incentives to encourage the private sector to join the game,” he said.

Last year, Viet Nam had 22 airports, including 10 international and 12 domestic ones, serving more than 103 million passengers, up 11 per cent year-on-year. The figure is set to rise to 112 million this year, according to Airports Corporation of Viet Nam.

Of the figure, only three met requirements to become national and international gateway airports: Noi Bai in Ha Noi, Tan Son Nhat in HCM City and Da Nang International Airport in Da Nang City.

The number of visitors travelling by air is estimated to grow 17.4 per cent in the 2016-2021 period, the fastest in Southeast Asia, where average growth is estimated at 6 per cent, according to the World Bank.

Under a Government decision last year, Viet Nam will increase the number of airports to 28, including 15 domestic and 13 international airports in the near future.

The country’s targeted fourth position in ASEAN in terms of transport output will be far from a possibility unless infrastructure is expanded, according to experts. — VNS

Vietnam’s booming aviation sector expected to become more competitive

Vietnam’s booming aviation sector expected to become more competitive

Thien Minh Group has announced that its Kite Air will launch in the first quarter of 2020 with six aircraft and investment capital of VND5.5 trillion.

Multi-trillion VND flow re-divides aviation market

Multi-trillion VND flow re-divides aviation market

Investors are queuing up to enter the aviation market with trillions dong worth of capital, which is expected to remap the market.

 
 

Other News

.
America has returned to Southeast Asia
America has returned to Southeast Asia
FEATUREicon  01/09/2021 

With the official visit to Singapore and Vietnam of US Vice President Kamala Harris, the White House has sent a message to Southeast Asia. It is “America is back” in a region that plays an increasingly important role in US strategy.

Overseas arrivals at airports confused about quarantine rules
Overseas arrivals at airports confused about quarantine rules
FEATUREicon  01/09/2021 

A few days ago, Chien Nguyen took a commercial flight from the US to Vietnam with transit in South Korea.

Should private hospitals be allowed to provide treatment to Covid-19 patients?
Should private hospitals be allowed to provide treatment to Covid-19 patients?
FEATUREicon  31/08/2021 

HCM City authorities have recently asked the Ministry of Health and the Ministry of Finance to consider permitting private healthcare facilities to provide Covid-19 treatment services to patients on demand. 

Business stories of the week
Business stories of the week
FEATUREicon  31/08/2021 

News highlights of last week included the arrest of a major owner of mutant orchids, the capital contribution from the owner of a super-business with huge registered capital, and the 'hidden' person behind the Quang Ninh Coal Football Club.

4-member family defeats Covid-19 after 10 days of self-treatment at home
4-member family defeats Covid-19 after 10 days of self-treatment at home
FEATUREicon  31/08/2021 

Despite being very tired, Huan never dared to sleep all night. He woke up at midnight and 4am to measure the oxygen saturation levels (SpO2) of his family members.

Music heals people's spirits during pandemic
Music heals people's spirits during pandemic
FEATUREicon  29/08/2021 

Social distancing requires the suspension of cultural and entertainment services; however, this does not hinder artists from unwinding.

71-year-old woman with Covid-19 willing to give up her life to save her husband
71-year-old woman with Covid-19 willing to give up her life to save her husband
FEATUREicon  29/08/2021 

In a state of severe respiratory failure, Mrs. Hanh still tried to get up and whisper to the doctor, asking to give up her ventilator to her husband...

Idle footballers do other jobs after V-league canceled
Idle footballers do other jobs after V-league canceled
FEATUREicon  28/08/2021 

After V-League 2021 was canceled, the players now have to turn to all kinds of jobs to have enough money to cover family life.

Three busy days of US Vice President Kamala Harris in Vietnam
Three busy days of US Vice President Kamala Harris in Vietnam
FEATUREicon  28/08/2021 

US Vice President Kamala Harris, the first US Vice President to visit Vietnam, had three busy days in Hanoi, with a packed schedule.

Apartment prices keep escalating despite pandemic
Apartment prices keep escalating despite pandemic
FEATUREicon  30/08/2021 

Contrary to all predictions, the real estate market has been hot during the pandemic. People are rushing to buy apartments for fear that prices will escalate after the pandemic ends.

Teachers complain about problems in online teaching, ask for guidance
Teachers complain about problems in online teaching, ask for guidance
FEATUREicon  28/08/2021 

After one year of teaching online, Vietnamese schools and teachers have become familiar with the new teaching mode.

The sleepless nights of doctors of the ‘Companion Physicians’ network
The sleepless nights of doctors of the ‘Companion Physicians’ network
FEATUREicon  28/08/2021 

On August 17, when hearing from a volunteer that two members of a family with four Covid patients were getting worse, Nguyen Van Chanh of the ‘Thay thuoc dong hanh’ network (Companion Physicians) immediately picked up the phone.

Enterprising leaders need to be protected by the law
Enterprising leaders need to be protected by the law
FEATUREicon  31/08/2021 

More than 87,000 Party members have been disciplined over the last five years, possibly the highest number of violations committed by Party members through the Party’s tenures.

Hanoi Mayor orders closer inspection of high-risk zones
Hanoi Mayor orders closer inspection of high-risk zones
FEATUREicon  27/08/2021 

“All the people in isolated areas must be considered F1 cases (contacts of infected people) and they must be tested. Those who refuse testing must be taken away to concentrated quarantine,” said Hanoi Mayor Chu Ngoc Anh.

Price storms sweep through Vietnamese businesses
Price storms sweep through Vietnamese businesses
FEATUREicon  30/08/2021 

According to Vietnamese businesses, the Covid-19 epidemic has made it difficult for them to maintain production and ensure on-time delivery. The higher transportation cost is "another hit".

Fourth Covid-19 wave still raging, 80,000 businesses leave market
Fourth Covid-19 wave still raging, 80,000 businesses leave market
FEATUREicon  27/08/2021 

The Ministry of Planning and Investment's latest report found that production and business activities have been seriously affected by the Covid-19 pandemic.

Fighting the epidemic based on science
Fighting the epidemic based on science
FEATUREicon  27/08/2021 

At the national level, much more data in the health, economic and social fields is needed to make science-based rather than sentimental decisions for anti-epidemic and economic fronts.

Latest drastic moves in Vietnam’s vaccine diplomacy strategy
Latest drastic moves in Vietnam’s vaccine diplomacy strategy
FEATUREicon  26/08/2021 

Through vaccine diplomacy, Vietnam has so far received millions of vaccine doses from the support of the international community.

Vietnam-US relationship: comprehensive and strategic
Vietnam-US relationship: comprehensive and strategic
FEATUREicon  26/08/2021 

This is the time to review the relationship between Vietnam and the US, 

Hotels, private hospitals join fight against Covid-19
Hotels, private hospitals join fight against Covid-19
FEATUREicon  26/08/2021 

Many resources in society have been mobilized for testing, vaccination and medical quarantine, which has improved service quality and helped businesses earn revenue.

 
 
 
Leave your comment on an article

OR QUICK LOGIN