The sector seems to be attracting a lot of attention from both private airlines and the regulators, whilst Vietnam Airlines the state-owned carrier records record number of passengers and a growing fleet of aircraft.
According to Boeing “the Vietnamese aviation sector will play a major role in the growth of the regional market over the next 10 to 20 years which is forecast to need 4500 new aircraft”. Vietnam has experienced very strong growth in the aviation sector in the last 5 years, in particular, with the number of passengers growing 3 fold and the fleet of local carriers doubling in that period. In the last 10 years, the number of seats has grown from 800,000 per month to 3.3 million.[1]
In 2018, alone, there were 50 new international city routes opened using wide-body aircraft and there are tow new routes in the offing which promise significant traffic those being to West coast USA (LA and San Francisco). The Civil, Aviation Authority of Vietnam (CAAV) statistics show that domestic carriers handled over 50 million passengers in 2018 (an increase of 14% YoY) and 400,000 tons of cargo (up 24%). In 2019 we have seen the inauguration of Bamboo Airways and the applications for licenses from Vingroup (Vinpearl air), Tien Minh Group (Kite Air) and Vietravel Airlines.
All this augers well for the local industry and shows again the entrepreneurial spirit of the Vietnamese private sector but as we have seen globally owning and operating airlines is not an easy business and needs specialist skills, not readily available in Vietnam not to mention the pilots and flight crews plus ground personnel.
On the one hand, it is good that the regulator has required new airlines to have pilot and crew training centres, however, it now seems that the regulator wants to limit the size of the fleets of the local airlines rather than letting the airlines themselves run their operating forecasts and models. CAAV has apparently advised local airlines to refrain from adding significant numbers of new aircraft to their fleets[2]. The regulator expects local airlines to be operating 255 aircraft by 2020 and 384 by 2025 and based on these numbers is suggesting fleet sizes for the local carriers. My question to myself is whether or not this is really down to the regulator or whether fleet sizes are a business decision, within the constraints of airport capacity.
Kenneth M Atkinson
[1] Boeing Representative – Hanoi October24th 2019.
[2] Saigon Times Daily October 7th 2019
Grant Thornton uses cookies to monitor the performance of this website and improve user experience.
To find out more about cookies, what they are and how we use them, please see our privacy notice, which also provides information on how to delete cookies from your hard drive.