Vietnam’s fourth airline prepares for take-off

By Doan Loan   September 13, 2016 | 12:42 am PT
The sky's the limit when it comes to the country's rapidly expanding aviation market.

Vietstar Airlines, a military-run aviation company, is waiting for the government’s approval to provide passenger and cargo transport services, according to the country's aviation authorities.

The Ho Chi Minh City-based airline is set to become the fourth carrier in Vietnam, one of the fastest-growing airline markets in Asia-Pacific.

Vietstar will focus on domestic routes between northern and southern Vietnam, as well as routes to northeast and southeast Asian countries, the Vietnam News Agency quoted the airline’s director general, Pham Trinh Phuong, as saying.

The six-year-old carrier, which currently has a fleet of five passenger planes and two cargo aircraft, including Boeing 737s and Airbus 320s, is expected to carry 500,000 passengers and transport 32,000 tons of freight during its first year of operation.

The Vietnam’s Aviation Administration said in a report submitted to the Transport Ministry that Vietstar Airlines meets all the requirements to become Vietnam’s fourth airline following national flagship Vietnam Airlines, budget carrier VietJet and low-cost airline Jetstar Pacific.

Vietnamese transport authorities require an airline to have at least VND700 billion ($30 million) in capital, according to a government regulation issued in 2013.

Vietstar Airlines was set up in 2010 by the Ministry of Defense. As of the end of last year, it was a VND650 billion ($28 million) joint venture between the Aircraft Repairing Company A41, the Vietnam Air Force, Vietstar Airways and Tin Thanh Express Company.

Industry experts said the fledging private airline will face difficulties competing in a market currently dominated by state-owned Vietnam Airlines and budget carrier VietJet.

VietJet has captured a 40 percent share of the domestic market, and will likely surpass flagship carrier Vietnam Airlines in 2016 as the country’s largest domestic carrier, said the Centre for Asia Pacific Aviation.

Vietnam’s airline industry is growing at speed to meet the rising demand of the domestic market, where air passenger traffic is forecast to reach 32.4 million people per year by 2020.

Official statistics show that the number of passengers on domestic flights increased 1.5 times to 20.7 million in 2015 from 14 million in 2010, and budget airlines are rapidly increasing their market share with annual growth of 15-20 percent.

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