Promising land of on-ground airport services

Private-sector competition in on-ground airport services would go a long way towards improving quality

Vietnam's aviation market is gathering speed as more and more new players like Vietravel Airlines, Vinpearl Air, and KiteAir are entering the market. Additionally, some airline giants also want to exercise on-ground airport services to improve quality and competitiveness against other players.

Recently, Vietjet was seeking permission from the Civil Aviation Authority of Vietnam (CAAV) to provide on-ground services at Noi Bai and Cam Ranh international airports from January 1, 2020.

At Noi Bai, the air carrier has 18 aircraft, flying on 15 domestic and 16 international air routes with 150 flights a day on average. The number of aircraft and flights will be higher in the time to come. Vietjet Air's on-ground services will increase the airline’s service capabilities and at the same time improve passenger service quality as well as the prestige of the aviation sector.

A senior executive of Vietjet Air complained that the current on-ground services provided by professional companies are bad and the airline has received a lot of complaints about service quality.

According to aviation experts, with the current high speed of growth, in addition to investing and improving infrastructure and human resources, on-ground airport services also need to be improved.

These services include flight planning, apron engineering, passenger service, luggage, aircraft cleaning, support services, as well as maintenance and repair, which are exercised by Hanoi Ground Service JSC (HGS) and Saigon Ground Services (SAGS) in which Airports Corporation of Vietnam (ACV) holds 20 and 48 per cent, respectively.

In fact, the ground service package for airlines alone brought VND1.288 trillion ($56 million) to SAGS in 2018, an increase of 16 per cent compared to 2017. Its after-tax profit was VND263 billion ($11.43 million) in the same year, 18 per cent higher than planned.

According to SAGS, revenue exceeded the plan because Vietjet Air has shifted to larger airplanes, Qatar Airways has increased flight frequency, Asiana Airlines Cargo has resumed operation, and the Danang branch found new clients in Qatar Airways, Air Seoul, Thai Vietjet Air, and Okay Airways.

The strong development of non-aviation services has also contributed to the company’s revenue growth. SAGS plans to obtain a revenue of VND1.43 trillion ($62.17 million) in 2019, an increase of 11 per cent, and after-tax profit of VND285 billion ($12.4 million), an increase of 8.4 per cent compared to 2018.

HGS reported a profit of VND72.4 billion ($3.15 million) in 2018, an increase of 6 per cent compared to 2017. The International Air Transport Association (IATA) predicted that Vietnam would become the fifth fastest-growing aviation market in the world by 2025.

In related news, Vietstar Airlines, after securing the air operator’s certificate (AOC), has become the sixth air carrier of Vietnam. Competition in the Vietnamese air transport market has been intensifying this year as more airlines are joining the market.

Regarding Vietjet Air's proposal of providing on-ground airport services, Prof. Nguyen Thien Tong, an aviation expert, said that the government should agree with airlines to do on-ground airport services to raise competitiveness and quality, instead of relying on the services of a few exclusive units.

"The entry of the private sector and the presence of more players in the segment of on-ground airport services will improve the quality of these services," Tong said, which would improve the brand and ranking of Vietnamese aviation, in turn.