Strong aviation growth creates room for more players: AirAsia

By Hung Le   July 23, 2019 | 07:15 pm PT
Strong aviation growth creates room for more players: AirAsia
An AirAsia Airbus A320-200 prepares to land at Noi Bai international airport in Hanoi, Vietnam April 18, 2019. Photo by Reuters/Kham.
With the region’s highest growth rate, there is room for new airlines to enter Vietnam's aviation market, AirAsia says.

The robust development of Vietnam's aviation sector, which sometimes reaches double digits, means AirAsia will always have a "growth pass" if it wants to enter, said Shasha Ridzam, AirAsia's group head of global affairs & sustainability, told VnExpress International.

Despite the market being seemingly crowded with the entry of Bamboo Airways at the start of the year and several other airlines waiting in the wings, AirAsia expects growth of 7-8 percent in passenger volume in the near future will create more opportunities, she said.

"In any case, competition should be seen positively, it is always good for the end users," Ridzam added.

The Malaysian budget carrier is still looking for a partner to set up a low-cost operation in Vietnam's aviation sector, despite having attempted four times since 2010, said an AirAsia representative who wished not to be named.

The representative said she could not reveal how the airline plans to move into Vietnam next, or whom it wants to negotiate a partnership with, but said it was looking for "the right partner and will continue to evaluate opportunities from time to time".

"Vietnam remains an attractive location for AirAsia because it has a growing young population and middleclass that is willing to spend more on travel. It also has a good, skilled workforce with tertiary education, and the government is showing clarity in driving the economy towards digitization," Ridzam said.

However, the country's aviation market could see even further growth if it could remove its infrastructure constraints. Vietnam should invest in low-cost carrier terminals (LCCTs) to increase efficiency amidst constrained capacity, she noted.

These would be single-storey terminals with high emphasis on automation and high efficiency, to produce fast turnarounds for aircraft. LCCTs constructed in smaller cities would also increase international tourism traffic, leading to improved economic contribution with higher business and commerce flowing into those areas, Ridzam added.

Vietnam currently has six commercial airlines licensed to fly: Vietnam Airlines, Vietjet Air, Jetstar, VASCO, Bamboo Airways and the latest Vietstar Airlines. Thien Minh and Vietravel Airlines are companies vying to be the seventh.

Last year, Vietnam’s 21 state-run airports served 103.5 million passengers, up 11 percent year-on-year, and the figure is set to rise to 112 million this year, according to the Airports Corporation of Vietnam.

The number of visitors travelling by air in Vietnam is estimated to grow 17.4 percent in the 2016-2021 period, the fastest in Southeast Asia where average growth is estimated at 6 percent, according to the World Bank.

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