Airlines boom as travellers opt to fly over overloaded infrastructure

Most airports are overloaded – and more new airlines are about to enter the market

Three new players

The Civil Aviation Authority of Vietnam (CAAV) has just sent a document to the Ministry of Transport regarding the establishment of Vietravel Airlines of Vietnam Travel and Marketing Transports JSC (Vietravel).

Vietravel Airlines' charter flights will be a new model in Vietnam, but are already popular over the world, being utilised by Contour Flight, TNT Vacations, Funjet Vacations, and ESO Travel, among others. They have their own fleet to serve clients. Accordingly, Vietravel Airlines chose Phu Bai International Airport (in Hue) as its base because Tan Son Nhat and Noi Bai International Airport are overloaded at present.

The project documents on establishing Vinpearl Air has also just been submitted to the Ministry of Transport by the CAAV. The project was invested VND4.7 trillion ($204.35 million), which is expected to exploit domestic and international flights from July 2020 with a fleet of six aeroplanes, with plans to add six more every year to build a fleet of 36 by 2025, working 62 domestic and 93 international routes. Vinpearl Air plans to be based at Noi Bai International Airport.

The next player setting foot in the aviation market is Thien Minh Aviation JSC (TMAV JSC), which has just sent a document to Quang Nam Department of Planning and Investment to establish KiteAir with the charter capital of VND1 trillion ($43.5 million). This airline and its 30 aircraft by 2024 will locate at Chu Lai International Airport for the next 50 years.

Overloaded infrastructure and shortage of human resources

According to the Airport Council International (ACI), Vietnam is ones of the fastest-growing-passenger markets over the world among the markets with more than 50 million passengers in 2016-2040. The International Air Transport Association (IATA) also ranks the growth of the Vietnamese aviation market fifth over the world, reaching 150 millionarrivals by 2035.

Airports Corporation of Vietnam (ACV), which operates 22 airports across the country, expected to see 112.5 million arrivals this year (the figure was 104 million last year).

In the year to June 2019, the combined market share of Vietnam Airlines, Jetstar Pacific, and VASCO was around 51 per cent, while Vietjet took up 41.3 per cent. Bamboo Airways of FLC Group, which just started operation in the beginning of the year, took up 7 per cent. These figures are far different from the beginning of the year, depicting the fierce race among these airlines.

According to aviation experts, aviation is a very special sector that has very high standards for safety, security, and national defence. The new players are expected to benefit customers, but also make it more difficult for authorities to deal with overloaded airports, especially Tan Son Nhat International Airport. In 2018, 38 million travellers passed through this airport, while its designed capacity is only 25 million.

Additionally, training a pilot is not easy. A pilot needs to spend 3-4 years of training and an additional 2-3 years for an apprenticeship before being able to fly. Thereby, the country needs to begin training human resources as soon as possible.