Friday, August 18, 2017 - 16:02:03

Domestic aviation recovery fuels competition

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The domestic aviation market has significantly recovered, and growth in passenger transport is up 21 percent.

It has opened up serious competition between national carrier Vietnam Airlines, and low-fare airlines such as Vietjet Air.

Despite the strong competition and limited infrastructure for airports, Vietnam Airlines has reached its profit targets for 2013.

Turnover reached 98 percent with over 54 trillion VND (2.5 billion USD) but their profits increased 162 percent, from their earlier target of 98 billion VND (4.7 million USD) to 140 billion VND (6.6 million USD) at the end of the year.

The airline transported 14.7 million passengers, nearly 8.8 million of them locals, an increase of 17 percent on their original targets.

The percentage of domestic seat usage reached over 81 percent and demonstrated that Vietnam Airlines has emerged unscathed from three sluggish years.

The airlines now takes 50 percent of market share for passenger transport, on both local and international flights. The recovery of Vietnam Airlines can be seen as a thermometer for the Vietnamese aviation market as a whole.

In 2013, the local aviation market made a swift recovery.

According to estimates from the Civil Aviation Administration of Vietnam, the total market for all the four airlines in 2013 was 29.5 million passengers and 630,000 tonnes of cargo, increases of 16.7 percent and 19.6 percent respectively in comparison with 2012.

Of this figure, the local market has grew 19.3 percent with 14.5 million of passengers.

The Minister for Transport, Dinh La Thang, confirmed that it was not just Vietnam Airlines who turned a profit. The youngest airline of the group, VietJet Air, revealed that they too made a profit last year.

In 2014, recovery speed for aviation is expected to be much faster, thanks to the improved global economic situation and a rise in tourists coming to Vietnam.

"Competition in the market has sharply increased as VietJet Air has expanded their fleet and local routes," said Pham Viet Thanh, Chairman of Vietnam Airlines' Management Board.

Vietnam Airlines' local market share dropped 7.3 percent in 2013, leaving them with just 61.4 percent of the market share.

At the same time, nationwide cost-saving measures have meant that many staff from ministries, industries and State enterprises have shifted from national carrier Vietnam Airlines to low-fare airlines like Jetstar Pacific and Vietjet Air.

"Competition with international and local low-fare airlines is really serious," Thanh added.

Vietnam Airlines predicts that in 2014, they will lose more than 6.4 percent of local passengers and by the end of the year will have only 55 percent of market share.

Meanwhile, VietJet Air's local passenger market share has increased 9 percent up to 25 percent, in comparison with 16 percent in 2012.

Experts predict that in 2014, the local aviation market will witness stronger competition between Vietnam Airlines and VietJet Air.

Despite low fares, high-quality airplanes and service, VietJet Air won't be able to satisfy the 3.2 million passengers they had in 2013 and so they plan to introduce two more Airbus 320s to the fleet in the fourth quarter of this year.

However, Vietnam Airlines still dominates the aviation market as they are big share holders at two other airlines, Vietnam Air Service Company (VASCO) and Jetstar Pacific, as well as owning all the logistic services.

Customers will benefit from the increased competition, experts said.-VNA
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