Door stays open for new players in Vietnam’s aviation market
Updated at Wednesday, 14 Aug 2019, 10:36
The Hanoitimes - Vietnam`s aviation market now has the participation of 68 foreign carriers from 25 countries and territories together with six domestic carriers,
Although the Vietnamese aviation market is seemingly crowded, new airlines still have opportunities here thanks to the market’s high growth potential, experts said.
According to Shasha Ridzam, head of AirAsia's global affairs & sustainability division, with the region’s highest growth rate, there is room for new airlines to enter Vietnam's aviation market. The robust development of Vietnam's aviation sector, which sometimes reaches double digits, means AirAsia will always have a ‘growth pass’ if it wants to enter.
Vietnam’s airports are expected to handle 131 million passengers in 2020.
Vietnam remains an attractive location for AirAsia because it has a growing young population and a middleclass that is willing to spend more on travel, Ridzam told the media, adding it also has a good, skilled workforce with tertiary education, and the government is showing clarity in driving the economy towards digitization.
The International Air Transport Association forecast the number of airline passengers traveling by 2037 could double to reach 8.2 billion, bolstered by strong demand in the Asia-Pacific region. Vietnam is one of five markets with the fastest growth rates in air passengers, besides China, the United States, India and Indonesia.
According to the Civil Aviation Authority of Vietnam (CAAV), the country’s aviation market now has the participation of 68 foreign carriers from 25 countries and territories together with six domestic carriers, namely Vietnam Airlines, Vietjet, Jetstar Pacific, Vasco, Hai Au and Bamboo Airways. Today, these airlines are operating nearly 130 international flight routes from and to Vietnam and 48 domestic routes.
CAAV statistics showed domestic carriers handled more than 50 million passengers in 2018, a rise of 14 percent over the previous year, together with nearly 400,000 tons of cargo, up by 26 percent.
Dinh Viet Thang, CAAV’s Director, said that with a population of more than 90 million, Vietnam’s aviation market should have the participation of more domestic carriers to offer more options for passengers and meet the increasing air traveling demand.
However, amid the rapid growth of Vietnam’s aviation market, it is vital to boost the development of aviation infrastructure as well as service quality. The congestion of major airports such as Noi Bai and Tan Son Nhat is also significantly affecting service quality.
According to Ridzam, the country's aviation market could see even further growth if it could remove its infrastructure constraints. Vietnam should invest in low-cost carrier terminals (LCCTs) to increase efficiency amidst constrained capacity.
These would be single-storey terminals with high emphasis on automation and high efficiency, to produce fast turnarounds for aircraft, Ridzam suggested, adding that LCCTs constructed in smaller cities would also increase international tourism traffic, leading to improved economic contribution with higher number of business passengers flowing into those areas.
Ngo Hong Minh, head of Vietnam Airlines’ market services department, said that the carriers propose the CAAV and Airports Corporation of Vietnam (ACV) hasten the upgrade and expansion of airports to enhance their passenger handling capacity, especially Noi Bai and Tan Son Nhat.
According to ACV, the airline industry has three important components: airlines, infrastructure and operation systems. It is important to develop all the components for the industry’s rapid but sustainable growth.
ACV said that airports are expected to handle 131 million passengers and 2.2 million tons of cargo in 2020, putting pressure on the airport system. By 2020, Vietnam plans to have 10 international airports and 13 domestic airports. The total number of airports will increase to 28 by 2030.
Experts said it is important to have proper airport planning which is proportional to tourism and socio-economic planning and develop good transport connectivity to the airports.
Minister of Transport Nguyen Van The said that the new carriers and airports will be enhanced to ensure service quality, safety and security.