Vietnam’s aviation market saw growth slow down in the first half of 2019

Slower growth but competition still intense in Vietnam’s aviation market.

It grew by 9.4 per cent to 38.5 million passengers, while growth in the same period last year was 14 per cent. Vietnam News Agency reports.

According to the Civil Aviation Authority of Vietnam (CAAV), domestic airlines operated 153,000 flights, a 2.4 per cent increase.

However, market observers said there are no signs of competition cooling down.

Vietnam Airlines for instance recently had to roll out a new liberal baggage policy to attract passengers.

Passengers now have a free baggage allowance of 32 kilogrammes in business class and 23kg in economy.

The hand baggage allowance has now increased to 12kg from the seven kilogrammes.

Experts said Vietnam Airlines is facing intense competitive pressure with the establishment of more and more low-cost airlines, and its market share has shrunk significantly.

Last year Vietjet Air became the largest airline in terms of number of passengers carried on domestic routes with a 48.9 per cent share compared to Vietnam Airlines’ 39 per cent.

More carriers are being established, like Bamboo Airways, Vietravel and Vinpearl Air.

Bamboo Airways has the highest on-time performance since it started flying a few months ago and the highest passenger load factor of 90 per cent.

It recently announced plans to begin direct flights to the US.

Vinpear Air has also announced a number of ambitious plans such as flying on international routes and training pilots, technicians and other personnel.

Experts said the Vietnamese aviation market has outstanding prospects in terms of inter- and intra-regional passenger and freight transport, making it attractive to investors and causing intense competition.

According to the CAAV, in 2010-17 the aviation market achieved average annual growth of 16.64 per cent in passenger numbers and 14 per cent in cargo volumes.

Under the plan for the aviation industry approved by the Government, the number of aircraft will increase to more than 220 by 2020 and 400 by 2030.

There will be 23 airports and 144 million passengers a year by 2020 and 28 airports and 308 million passengers by 2030.

The International Air Transport Association estimated Vietnam to be the world’s fifth fastest growing aviation market by 2035.

As for financials, in the first half of this year Vietnam Airlines’ turnover was estimated at VNĐ51.66 trillion (US$2.5 billion), a year-on-year increase of 5.5 per cent, and profit at VNĐ1.65 trillion (US$71.73 million), up 30 per cent as compard with the set target.

Vietjet Air’s turnover was up 24 per cent at VNĐ26.03 trillion, and pre-tax profit was up 11 per cent at VNĐ2.4 trillion.

It is estimated that the country would need at least 10 more airlines to meet the growing demand.

It now has five: Vietnam Airlines, Jetstar Pacific Airlines, Vietjet, Vietnam Air Services Company or VASCO, and Bamboo Airways.

— VNS