Vietnamese air carriers warned they may lose in home market

With high growth in the domestic market, Vietnamese airlines saw their international market share decreasing sharply in the first six months of the year.

Meanwhile, they are meeting difficulties in expanding fleets because of infrastructure problems.

With the number of passengers on domestic flights increasing by twofold within three years, Vietnam is one of the 10 most potential aviation markets in the world and was added into the top 20 in terms of domestic passengers.

The strong development of the Vietnamese aviation market has prompted the biggest air carriers to fly to Vietnam. A report shows that less than 20 foreign air carriers exploited the Vietnamese market in 1993 with 20 international air routes. Meanwhile, the number has increased to 55 airlines and 100 air routes.

While Vietnamese air carriers such as Vietnam Airlines, VietJet and Jetstar Pacific are busy competing with each other in expanding their domestic fly network and airfare, foreign air carriers have increased their services on international air routes with the department/arrival points in Vietnam.

In the first six months of 2016, Vietnam airlines saw market share in international air routes decreasing sharply by six points to 43.3 percent as international airlines strengthened their activities.

Most recently, Japanese low-cost carrier Vanilla Air announced it began selling tickets for flights from HCM City to Taipei in a move to compete directly with domestic airlines.

This has presented challenges for domestic air carriers, especially as their plans to expand fleets are encountering problems because of poor infrastructure.

Some experts have raised their concern about the rapid growth of the domestic aviation market and laid blame on air carriers’ efforts to buy more aircraft, which could lead to incompatibility between the high number of aircraft and poor infrastructure, including airports.

Meanwhile, other experts argue that expanding the fleets is a must, citing figures to prove that Vietnamese fleets are smaller compared with other countries.

According to CAPA, by November 2016, the total number of aircraft in exploitation in Vietnam had reached 142, ranking sixth in the region. The number is nearly equal to 1/6 of Indonesia’s.

The largest three Vietnamese airlines have recently all placed orders on purchasing hundreds of aircrafts worth tens of billions of dollars. However, the lack of parking lots at large airports has caused problems.

Experts said the growth rate of 20 percent is still below the 27 percent growth rate in Thailand and 30 percent growth rate in China.

Mai Nam / vietnamnet