Airlines yet to get lift off

Pham Viet Thanh, chairman at Vietnam Airlines - the national flag carrier holding around 70 per cent of passenger transportation market share on local routes, said the local economy was showing no sign of rebound at least in the first half of 2013, which would rein in travel demands.

“Local aviation market will possibly grow 4-5 per cent this year only, mainly because several budget airlines offer promotions to attract customers from railway and road transport businesses,” said Thanh.

Among the five operating airlines currently transporting passengers on local routes in the country, only Vietnam Airlines has unveiled its business outcomes in 2012.

Accordingly, its total revenue reached VND50.891 trillion ($2.4 billion), surging 6.3 per cent and profits VND69.8 billion ($3.3 million), up 239 per cent on-year. By mid December 2012 Vietnam Airlines controlled 69.7 per cent of domestic market share, down 4.47 per cent against 2011.

Vietnam Airlines’  forecast for the domestic aviation market development remains gloomy. In 2012, Vietnam’s  air travel market recorded its slowest growth in the past decade in passenger transport routes--merely 1.2 per cent, tantamount to 12.1 million passengers. Freight transport volumes on local routes slid 5 per cent against 2011 felling to just 122,000 tonnes.

Jetstar Pacific, which ranks third in passenger transport market share on local routes, also envisions no better performance.

In 2012 it changed its aircraft fleet from B737 to A321 and reduced the fleet from seven to five aircraft due to fear of the sector’s transportation capacity redundancy. JP has launched two international routes, showing diversity in its strategy to meet market trends.

Meanwhile, the new budget carrier VietJetAir, in second place regarding passenger transport market share on local routes, is optimistic with aviation market movements.

“In 2013, VietJetAir will flexibly develop its fleet with new and modern aircraft based on market situation to bring passenger wider choices in terms of flying times and routes,” said VietJetAir business development director Desmond Lin.

VietJetAir reportedly strives to empower its fleet with from 2 to 8 new modern A320 aircraft within 2013.

An industry expert said the domestic aviation industry would likely witness a fierce competition among Vietnam Airlines and VietJetAir in 2013.

With advantages seen in low ticket costs and comparable equipment and service quality VietJetAir reportedly seeks to break its 2012’s outcome of one million transported passengers in 2013.

“The consumers would benefit the most from the competition,” said the expert.