Month: September 2023

Foreign airlines seeking to expand into Vietnam’s aviation market have frequently been challenged by regulatory restrictions. We discuss the alternative investment opportunities available within Vietnam’s aviation sector. 

The challenge of attracting foreign investment to propel Vietnam’s aviation sector to new heights has long been a concern for industry planners. Demand for aviation services is huge and still growing but attracting foreign capital has been a struggle.

There are a number of factors contributing to the hesitancy among foreign investors to invest in Vietnamese airlines, however, there are alternative investment avenues within Vietnam’s aviation domain.

Indeed, the potential in the aviation sector is huge. However, it has not been tapped effectively. – Dinh Viet Thang, Director of the Vietnam Aviation Administration, in an interview with Vietnam Investment Review (VIR).

Despite facing difficulties penetrating the Vietnamese market with Jetstar Pacific, Jetstar CEO, Gareth Evans, still told Forbes that the Vietnam market still holds significant potential.

“Domestically Vietnam is an incredibly competitive market”, he said, adding “there is 35 percent capacity growth.”

The Vietnamese market is highly competitive, with a potential population of over 100 million people and a strong growth rate. In particular, the low-cost segment dominated by VietJet Air is experiencing rapid growth.

VietJet Air’s remarkable ascent exemplifies the groundbreaking advancement of the low-cost airline concept in Vietnam. During the first half of 2023, VietJet Air’s market share experienced a remarkable transformation; with over 10,000 flights, it was responsible for 37.6 percent of all flights among Vietnam’s domestic carriers.

Notably, VietJet Air stands out as one of the few profitable airlines operating amid the challenging circumstances that have plagued the entire industry, particularly in the aftermath of the COVID-19 pandemic.

The continued expansion of low-cost airlines, coupled with this competitive context, presents a challenging environment for investors seeking to establish a strong presence in the Vietnamese aviation market.

Airline catering

One such area is companies that provide meals and goods for flights. Following a period of stagnation caused by the epidemic, airlines are gradually returning to pre-pandemic conditions, with flights gradually resuming. As travel demand increases, so does the need for in-flight food and beverage services.

Positive signs for Vietnam’s aviation future
There have been some notable improvements and there has been a lot of positive news in the aviation sector of Vietnam, of late.

Firstly, there has been a focus on infrastructure development. According to the master plan for airport and airport system development from 2021 to 2030, the government has approved the construction of eight new airports, bringing the total number to 14 international airports and 19 domestic airports. Of particular significance is the Long Thanh Airport project, which is set to become the largest airport in Vietnam when completed.

There has also been an increase in aircraft purchases. Vietnam Airlines and Boeing recently signed a memorandum of understanding, solidifying a contract for the purchase of 50 Boeing 737 Max aircraft. This deal, valued at US$10 billion is a significant investment in enhancing the airline’s capacity. Similarly, Vietjet entered into an agreement with Carlyle, a company that specializes in finance and global aircraft leasing, to finance Vietjet to the tune of US$550 million in order to purchase additional aircraft from Boeing.

The development of infrastructure and the purchase of new aircraft allows airlines to increase their capacity, open new routes, enhance passenger comfort, and improve operational efficiency. It is a strategic investment to meet the growing needs of the market and remain competitive in the industry. This also helps investors feel more confident about the growth prospects of the aviation industry in Vietnam.

Aviation in Vietnam moving forward
Despite challenges within the legal framework and the competitive market, Vietnam’s aviation industry possesses abundant untapped potential. While the mentioned aspects are noteworthy, there are numerous other opportunities waiting to be explored for statute investors.

Source: vietnam-briefing.com

Vietjet noted in a statement that the new routes will be launched from early September to early December and it will link Vietnam’s major cities and its tourism island of Phu Quoc with Ahmedabad, Hyderabad, Bangalore, New Delhi and Mumbai.

Vietjet, Vietnam’s largest private airline, is gearing up to meet the increasing demand from Indian tourists who are increasingly considering Vietnam as an emerging travel destination.

As reported by PTI, the airline plans to expand its services to India by introducing a new route between Tiruchirappalli (Tamil Nadu) and Ho Chi Minh City, with the launch expected in November, according to airline officials.

In August, Vietjet initiated direct flight services from Kochi in Kerala to Ho Chi Minh City. A senior representative from the airline mentioned that Vietjet currently operates 32 round-trip flights to and from India each week.

“From November, Vietjet is expected to launch a new route connecting Tiruchirappalli and Ho Chi Minh City and we have plans to have an initial frequency of three return flights per week, in order to meet rising demand from travellers in both countries,” PTI reported citing the official, who doesn’t want to be named.

“Vietjet would like to eventually expand its services to all capital cities in India”, he said.

During a recent meeting with a specific group of Indian media representatives in Ho Chi Minh City, the official elaborated on the rationale behind their efforts to expand connectivity. He mentioned that Vietnam is becoming increasingly popular as a tourist destination among Indian travellers.

Additionally, many Vietnamese individuals are also keen to explore one of the oldest civilizations in Asia, contributing to the growing interest in travel between the two countries.

“Vietjet’s entry into the market has increased the total number of passengers travelling between Vietnam and India in the first six months of 2023 to over 3 lakh, nearly five times higher than 70,000 passengers recorded in the same period last year,” he said.

In particular, for routes connecting to Ho Chi Minh City, we have seven round-trip flights from Ahmedabad weekly, and four round-trip flights from Delhi, Mumbai and Kochi, respectively, he said.

For routes connecting to Hanoi, there are seven round-trip flights weekly from Ahmedabad, three round-trip flights from Delhi and another three from Mumbai, he further said.

When asked how Vietjet’s expansion would benefit the Indian economy, the official said the airline’s new routes would deliver sustainable growth in tourism, trade and economy in both Vietnam and India.

“Our commitment and passion is to make air travel more affordable for both Vietnamese and Indian people, help stimulate bilateral growth in tourism, trade and economy, and maintain and grow our presence in the Indian market while ensuring quality service to meet Indian demand,” he added.

Further explaining their future plans for Indian passengers, the official said Vietjet recently added a seventh A330 to its fleet to meet demand in the region. By the end on 2023, the airline expects to have a total of 10 A330s, he added.

Vietjet has been operating for over a decade with around 450 flights daily across 120 routes connecting Vietnam with other countries across Asia and Australia.

(Ha Noi, September 21, 2023) –The International Air Transport Association (IATA) and Vietjet Air signed a training agreement appointing Vietjet Aviation Academy as IATA’s latest Regional Training Partner (RTP) in Vietnam. 

As an IATA RTP, Vietjet Aviation Academy will offer IATA Training courses designed by industry experts. These courses are internationally recognized training programs and are updated frequently to keep pace with the latest regulatory procedures, new standards, and the fast-changing demands of the aviation industry. 

Mr. Philip Goh, Regional Vice President for Asia – Pacific of IATA said: “We are delighted to partner with Vietjet Aviation Academy to provide training in Vietnam. Having enough trained personnel is key as the aviation industry recovers from COVID-19. Our cooperation with Vietjet Aviation Academy will further support the development of aviation talent in Vietnam and in the region.”

Vietjet Vice President cum Chairman of Vietjet Aviation Academy Luong The Phuc shared at the ceremony: “Human Resources are always the focus of Vietjet’s all development plans as well as the aviation industry in general. At Vietjet Aviation Academy, we are providing our trainees with the best learning environment, where everyone can attend IATA courses, receive IATA international certificates and access the most modern training equipment in the aviation industry.”

Vietjet Aviation Academy is the leading modern training and research institute in the region and over the world, currently owning three cockpit simulators (SIM) for pilot training, aircraft and passenger cabin mockups, engines, technical parts and functional training rooms, an olympic standard wave pool, a stadium, and engineer training center, etc. which meet international standard training programs for pilots, cabin crews, rosters, engineers, and aviation staffs. Vietjet Aviation Academy not only meets the training and human resource development needs of Vietjet Air but also the aviation industry in the region and the world. To date, Vietjet Aviation Academy has provided training for nearly 395,000 trainee pilots, cabin crews, engineers, staff.

With the vision of a pioneering academy in the aviation training, a strategic location in the region and the world, and aligned with IATA Training internationally recognized programs, Vietjet Aviation Academy will be a gathering place for  international students to practice, study, create and conquer their dreams of flying and conquering the sky.

The cooperation event between Vietjet Aviation Academy and IATA is part of the sustainable development roadmap, research and application of aviation science and technology, training professional and creative aviation human resources to succeed and shine.

Source: Vietjet Air

Congratulations to JD Airlines on inaugurating their first international all-cargo route connecting Shenzhen and Ho Chi Minh City!

we are so excited to be JD ‘s first interline partner in Vietnam, collaborating to bring e-commerce goods via the VietJet Air Cargo network.

The route is optimized to primarily transport cross-border ecommerce parcels from China, while also facilitating the shipment of key agricultural exports – such as fruit and seafood – from Vietnam.

This cooperation strengthens connections and enhances opportunities in e-commerce and import-export activities between the two countries in particular and globally in general. We are very grateful and appreciate JD’s trust.

This is an important milestone and hopefully, we will soar to new heights together!

Foreign companies including Boeing, Walmart and Amazon are looking for suppliers for Vietnam in a series of events hosted by the Ministry of Industry and Trade.

Representatives of energy firm AES, retailer Carrefour, sports equipment retailer Decathlon, furniture company IKEA, retailers Aeon, Uniqlo and Central Group, among others, were present at the Export Forum 2023: Connecting International Supply Chains on Wednesday in Ho Chi Minh City.

Oliver Langlet, CEO of Central Retail in Vietnam, said that the domestic manufacturing sector had been developing well in the last 30 years as shown by many high-quality products and the industry’s efficient workers.

Lionel Adenot, CEO of Decathlon Vietnam, said that the country had a big opportunity to be a key factor in the global supply chain.

Companies should make early plans and prioritize domestic raw materials while limiting environmental impact, he added.

Deputy Ministry of Industry and Trade Do Thang Hai said that the participation of businesses from over 30 countries and territories would help push Vietnam deeper into the global supply chain.

In the first eight months, Vietnam’s trade reached $435 billion with a trade surplus of over $20 billion.

Source: e.vnexpress.net

The global air cargo spot rate flattened to USD 2.19 per kg in August, its lowest level since the onset of the pandemic as another weak summer month saw chargeable weight edge -1% lower for a fourth consecutive month, according to the latest weekly market analysis from CLIVE Data Services, part of Xeneta.

While shippers and forwarders continue to benefit from the overall decline of general air freight rates, rising jet fuel prices should concern an already contracted market, with the US gulf coast jet fuel spot price jumping 21% month-over-month.

August saw global air cargo capacity rise +7% year-on-year, while CLIVE’s global dynamic load factor analysis, which measures cargo load factor based on both volume and weight perspectives of cargo flown and capacity available, climbed one percentage point about the previous month to 56%. But it is worth noting that the August global load factor continued to fall year-on-year, down 3% from last year’s level. Softened global demand and the capacity surge were the main reasons behind this.

The data dampens some industry reports of a slight spike in demand in August, leading to hopes of a rise in volumes going into the final four months of the year.

“We are picking up signals that it could take another few quarters before we see more demand on a global level,” said Niall van de Wouw, Chief Airfreight Officer at Xeneta.

“August was very quiet, like July, and we see no meaningful signals from a qualitative or quantitative point of view of any kind of peak arising this year. There might be some early peak season charter requests floating around but they are backed up by very little demand. The (low) rates and the limited timeframe that the requestors are looking for signal that they are not too concerned at the moment about getting the required capacity when they actually need it.

“The market seems to have levelled out, but still holds a lot of uncertainty, and not just for airfreight. There was also no peak for the ocean market, which typically precedes the airfreight market by a couple of months. There are even blank sailings scheduled ahead of the Golden Week period.

“There is likely to be upward pressure on airfreight rates in the second half of October as capacity is taken out of the market, but it’s getting late in the game to positively impact the industry’s 2023 performance, and the signals for the rest of the year are not good given the macroeconomic outlook hasn’t improved,” van de Wouw added.

Average general airfreight rates in August dipped as low as USD 2.13 per kg in the first two weeks of the month, although this varies by trade corridor. Of 10 major trade lanes assessed in the past month, only China-United States and Southeast Asia-United States recorded growth, with air cargo spot rates up 3% and 4% respectively on these corridors. This is attributed to a more resilient US economy with strong retail sales and, to some extent, also delayed recovery of US-China passenger bellyhold capacity, which is growing at a much slower pace than Europe-China.

Even so, due to capacity shortage triggered by various geopolitical issues, airfreight spot rates ex Northeast Asia to Middle East & Central Asia, Northeast Asia to Europe, China to the US and China to Europe remained highly elevated, still up by around 55% from their pre-pandemic levels.

Looking forward, the oceanfreight container market might shed some light on where the air cargo market is heading, given that the ocean market tends to begin its yearly peak season a few months ahead of the airfreight cycle. So far, the global ocean container market has not shown any meaningful peak season trends.

“The air cargo industry is coming to terms with the market conditions and not even the current and planned restrictions we see on container ships moving through the Panama Canal are likely to provide a noticeable uptick to airfreight volumes. Whichever way you choose to look at it, demand growth simply does not exist in this current moment or for the foreseeable future. Shippers will no doubt be tempted to fix more longer-term deals because the leveling of volumes and the imminent drop-off of some capacity means the market may not get any better than it is right now for capacity buyers,” Niall van de Wouw said. 

Source: aircargoweek.com

July 2023 global air cargo data shows a continuing trend of recovering growth rates since February with demand tracking just 0.8% below previous-year levels.

Although demand is almost flat compared to 2022, this is an improvement on recent months’ performance, particularly significant given declines in global trade & rising concerns over China’s economy.

Source: International Air Transport Association (IATA)