Thu, Aug 02, 2018 - Page 10 News List

New airline set to join Vietnam skies

Bloomberg

Vietnam’s skies are about to get more crowded.

With state-owned Vietnam Airlines JSC and budget carrier VietJet Aviation JSC serving one of the world’s busiest routes, property developer FLC Group JSC wants a piece of the action with a new airline, operating 37 routes in the country after its inaugural flight in October.

Called Bamboo Airways, the new airline still needs a government aviation license before operating and is seeking to capitalize on the nation’s growing middle class and rapidly expanding tourism industry.

The International Air Transport Association (IATA) has forecast Vietnam would be among the world’s top five fastest-growing air travel markets in the next 20 years.

The route between Hanoi and Ho Chi Minh City was already the world’s sixth-busiest in terms of passenger numbers last year, according to IATA.

The aviation industry handled 23.6 million passengers during the first half of this year, a 15 percent increase from the same period last year, according to the Vietnamese General Statistics Office.

“With a good investment, well-prepared staff and new aircraft, we will become a giant right after we launch the airline,” FLC Group chairman Trinh Van Quyet said in an interview in his Hanoi office.

The Civil Aviation Authority of Vietnam said the company has met “sufficient conditions” required to be able to fly in October and the flight license is forthcoming, he added.

Bamboo Airways’ proposal is being reviewed, a Vietnamese Ministry of Transport official said.

Still, the new airline might struggle to crack Vietnam’s aviation market, which also includes Vietnam Airlines’ budget carrier unit and joint venture with Jetstar Pacific.

“Anybody coming into the market now is late,” said Brendan Sobie, a Singapore-based analyst at the CAPA Center for Aviation. “You have a domestic market becoming saturated. The international market will probably slow down in a couple of years.”

Vietnam’s annual domestic seat capacity growth has slowed to single digits in the past 18 months after posting increases well above 20 percent annually the four prior years, Sobie said.

International seat capacity growth is accelerating, reaching about 20 percent a year in the past three years, he said.

Vietnam’s growing middle class and the government’s efforts to make tourism a major industry will be enough to create room for the new carrier to succeed, Quyet said.

Bamboo Airways would initially use 20 leased narrow-body and wide-body aircraft, he added.

Parent FLC Group agreed to buy 24 Airbus SE A321neo aircraft worth US$3.2 billion at list price for Bamboo Airways.

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