The Vietnamese aviation sector is preparing for heightened competition this year, with the emergence of a new airline and the resurgence of one that was previously struggling. Sun PhuQuoc Airways, which commenced operations in November, along with low-cost airline Vietjet Air, have expanded their fleets this year, with Sun PhuQuoc boasting six jets and Vietjet owning over 100 jets, having added more than 20 just last month.
Sun PhuQuoc, the new entrant, has been increasing its staff strength since its inception. Meanwhile, Bamboo Airways, which faced some difficulties, was acquired by property developer FLC Group in September and has been expanding its fleet since then. Market analysts from MBS predict that the expansion of Vietnamese airlines’ fleet will exceed passenger growth by 2026. They believe that the entrance of Sun PhuQuoc and the comeback of Bamboo Airways after restructuring will introduce competitive pressure on other industry players.
In particular, intense competition is expected among the three smaller airlines, Sun PhuQuoc, Bamboo, and Vietravel Airlines. Sun PhuQuoc plans to increase its fleet to 20 aircraft and start international flights as early as this year. Bamboo Airways, with its current fleet of eight planes, plans to add eight to 10 more annually until 2030 and expand its network.
Currently, the majority of its flights are between Hanoi, Da Nang, Ho Chi Minh City, and some other tourist spots. Vietravel Airlines, backed by T&T Group, has only three aircraft, falling short of its earlier plans to increase the count to 10 by the end of last year.
MBS anticipates that this escalating competition will not significantly impact Vietjet and Vietnam Airlines, which together account for 90% of the aviation market. These prevailing market leaders are primarily focused on expanding their international networks. Over the past two years, Vietjet has added services to Northeast Asia, India, and Australia. In contrast, Vietnam Airlines launched long-haul flights to Europe.
However, these two airlines must compete with foreign airlines. Several of these international competitors started operating flights to Vietnam last year, creating competition not only based on pricing but also on service quality. Of note, around 28 aircraft, mainly owned by these two dominant airlines, are currently under maintenance due to engine issues.
Other possible challenges for Vietnamese airlines this year include geopolitical factors affecting fuel prices and international route networks, flight delays due to abnormal weather, and traffic congestion at major airports. Despite these potential obstacles, analysts indicate passenger numbers have increased over the past year and are projected to grow this year. According to aviation authority data, the total number of passengers last year was 83.5 million, including 44.6 million international passengers.
Sheldon Hee, regional vice president of Asia-Pacific at the International Air Transport Association, stated that Vietnam has been one of the ten fastest-growing aviation markets in the region over the past decade. He also pointed out that Vietnamese airlines still have considerable potential for growth. Currently, the country has direct flights to about 30 countries, while Thailand and Singapore have connections with over 50 countries.
What is the current aviation market situation in Vietnam?
The Vietnamese aviation market is set for heightened competition with the introduction of a new airline, Sun PhuQuoc Airways, and the resurgence of Bamboo Airways.
What are the growth plans of these emerging airlines?
Sun PhuQuoc plans to increase its fleet to 20 aircraft and start international flights this year. Bamboo Airways aims to add eight to 10 planes annually until 2030.
Will the growing competition affect the market leaders?
Analysts predict that the competition is unlikely to significantly impact Vietjet and Vietnam Airlines, which together control 90% of the aviation market. These airlines are primarily focusing on expanding their international networks.
