Airline competition redraws Vietnam's aviation map

Vietnam Airlines continues to be a traditional airline which provides full-service flights, but it will cooperate with Jetstar Pacific to exploit the lower-end market. Vietjet Air targets a hybrid model between traditional and low-cost airlines.

Vietnam Airlines, the nation’s flag air carrier, has been expanding air routes to the biggest finance centers in the world. Meanwhile, Jetstar Pacific, where Vietnam Airlines holds a 70 percent stake, has been trying to expand domestic flights and flights to the region.

While Vietnam Airlines had a ‘4-star airline’ message, Jetstar’s slogan is ‘gia re moi ngay’ (low prices every day).

The airline states on its official website that if someone finds any other airline that offers ticket prices lower than Jetstar Pacific’s, the airline will sell tickets at 10 percent lower than airfares he finds.

While Vietnam Airlines and Jetstar Pacific join forces to exploit all the segments in the aviation market, Vietjet is targeting the model between low-cost and traditional airlines. The hybrid model has been applied in other parts of the world in recent years.

Is this a wise step taken by Vietjet Air? Nguyen Thi Phuong Thao, Vietjet’s CEO, at an event held in HCMC recently, said 20-30 percent of Vietjet’s passengers are those who fly for the first time.

However, the considerable domestic market share and good branding has helped Vietjet become more confident to expand to international air routes and jump into the high-end market.

“As for international air routes, we strive for new passengers who have never flown to Vietnam,” she said. “More than half of international air routes opened by Vietjet Air have not been exploited by any other airline."

Vietjet Air is believed to have a low-price strategy, but only to attract passengers on less-crowded air routes, but it does not have to do this for crowded routes. It has stated that it won’t fly on ineffective routes. On some air routes, Pacific Airlines is the only service provider.

Vietjet Air has recently attracted public attention with its proposal to become the investor in a project expanding Tan Son Nhat Airport in HCMC.

Making investment in airports is a new business field for Vietjet Air. However, this step, in analysts’ eyes, shows that Vietjet is taking an important step in its plan to minimize operation costs in the future.

Vietjet Air has shown an increase in non-ticket revenue. The air carrier’s prospectus showed that the ancillary revenue in 2016 reached VND3.5 trillion, an increase of 46 percent over the year before.

Thanh Mai / vietnamnet