Vietnam property tycoon bets big on new airline

By AFP   August 1, 2018 | 01:10 am PT
Vietnam property tycoon bets big on new airline
Trinh Van Quyet is confident that his new airline will turn a profit 'as soon as we start flying' in October. Photo by AFP/Nhac Nguyen
Bamboo Airways will come up against heavyweights such as AirAsia and Thai Airways as well as local players Vietnam Airlines and VietJet.

Pressed by poverty into work when he was 14, Trinh Van Quyet now presides over a Vietnamese property empire and is betting billions on a new airline in Southeast Asia's crowded aviation sector.

The 43-year-old tycoon clawed his way up from a tough start in the Vietnamese countryside, his modest aspiration back then to become a civil servant.

But from lowly beginnings -- his first job was in his mother's shop -- he now oversees the FLC Group empire that includes luxury resorts and golf courses, mining and vocational training.

He says he gave up his youth to get where he is today.

"I dared to sacrifice my childhood... when you're supposed to be able to play, study, and later, fall in love," he told AFP from his polished high-rise office in Hanoi this week.

His company has a market capitalisation of around $200 million and he is branching out, taking a punt on Bamboo Airways, a new airline set for its maiden flight in October and a first foray into a business that can be unforgiving to newcomers.

"We will be huge, right when we launch... we will make a profit as soon as we start flying," the bullish executive says.

His master plan is to lure piles of passengers to "undiscovered" holiday destinations -- many in spots he has resorts -- offering high-quality service on the cheap.

But he's got a lot going against him.

Bamboo Airways will come up against heavyweights such as AirAsia and Thai Airways as well as local players Vietnam Airlines and VietJet.

With a mushrooming middle class hungry for travel, Vietnam's aviation market has soared in recent years.

Passenger numbers jumped to 62 million last year from just 25 million in 2012, according to the Civil Aviation Administration of Vietnam.

But Southeast Asia's once red-hot sector is showing signs of cooling while airport capacity is being squeezed across much of the region.

"It's not realistic to think that the kind of growth that we've seen in Vietnam in the last two years will continue," Brendan Sobie, an analyst at the CAPA Centre for Aviation, told AFP.

Bamboo Airways is likely to struggle for prime slots at the country's busiest airports in Ho Chi Minh City and Hanoi, while Vietnam's second-tier hubs are in desperate need of renewal.

Hard work, sacrifice

Undeterred, Quyet has signed up for 20 of Boeing's 787 Dreamliners worth $5.6 billion and committed a further $3.2 billion to buy 24 Airbus 321neo planes.

Thirty percent of that money will come from FLC -- the rest from foreign investors -- a huge upfront investment for a startup.

While he still does not have his government aviation licence yet, Quyet is in a rush, planning to operate 37 domestic routes after his maiden flight.

In 2019 he wants to offer routes to Asian destinations and North America.

The airline's hook will be to fly to lesser-travelled spots like Quy Nhon and Thanh Hoa and lasso customers into discount packages at his resorts.

But some analysts say that is an outdated model in an era when travellers can tailor holidays for themselves online.

"Integrated tourism and aviation, it sets off a few alarm bells... sometimes demand is there, sometimes not," Richard Aboulafia, vice president of analysis at Teal Group, told AFP.

But Quyet has spent most of his life beating the odds.

Born poor in Vinh Phuc province, he grew up playing in the shade of bamboo trees, whose memory has inspired the name for the carrier.

He took his first flight at age 17 from Ho Chi Minh City to Hanoi carrying CD players to sell at a time when war-scarred communist Vietnam was just starting to embrace market reforms.

Whether his Midas touch works in the ruthless aviation industry will be closely watched.

Other tycoons have failed, like the now-defunct Kingfisher Airlines run by Indian tycoon-turned-fugitive businessman Vijay Mallya.

"It's not an easy business to make money in generally," Sobie said. "It's very risky and capital-intensive... and chances of success are relatively low."

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