The growth of seat capacity growth (SCG) of Vietnam’s aviation has slowed in 2018. However, new potential competitors still feel opportunities in this growing market. .
FlightGlobal’s schedule data shows that the total seats of three major Vietnamese airlines – Vietnam Airlines, Jetstar Pacific and Vietjet Air – increased by 4% in 2018 to 46 million. This figure has decreased compared to the 6% growth in 2017 and the incredible growth rate of 34% in 2016.
On the domestic route, SCG of Vietnam Airlines in 2018 decreased 1% to 22 million. Jetstar Pacific has increased by 6% to 6.6 million. Meanwhile, Vietjet Air still maintained impressive growth, increasing by 12% to 1.8 million.
Domestic seat growth only reached 2% in 2018 to 38 million, half of the 4% growth rate in 2017, far behind 39% in 2016 and 20% in 2015.
On domestic routes, Vietjet once again leads to passenger growth, increasing by 8% to 15 million, while Jetstar Pacific adds 5% to 6 million. Meanwhile, Vietnam Airlines reduced 4% of domestic capacity to 16.5 million.
However, on international routes, the picture is somewhat different, when the three carriers provide 16% more international seats, or 5.5 million. However, international seat growth was still significantly smaller than in 2017 at 41%, largely driven by Vietjet as it doubled its international capacity.
On the main route, Ho Chi Minh City-Hanoi, Vietjet has increased seat supply. In December 2018, the airline carried 133,000 passengers, an increase of 51% over the same period in 2017. Jetstar Pacific also increased capacity, carrying 65,000 passengers, 25% more than a year earlier. However, Vietnam Airlines experienced a sharp decline with 20% fewer passengers in December 2018 compared to a year earlier, as the airline cut its monthly flights on the route from 779 to 660.
Two new competitors can enter the market. Bamboo Airways started taking off earlier this year. AirAsia also hopes to compete for market share with Vietnamese airlines.
In addition, Vietnam’s aviation continues to face difficulties with overload of receiving capacity at Tan Son Nhat airport in Ho Chi Minh City, while Long Thanh international airport is still in the process of being deployed.
Another challenge is that it will be difficult for airlines to recruit enough pilots to meet their capacity building plans.
According to Flight Global, this year promises to be a remarkable year as Vietnamese airlines increase their fleet. Flight Fleets Analyzer shows that as of September 9.1, Vietnam Airlines, Vietjet and Jetstar Pacific have had 165 aircraft in service. By the end of 2019, this number is expected to increase to 194.
Most of this increase, about 20 aircraft, will come from VietJet, as the airline has approved an order plan for 217 jets – 100 737 Max 8-200 and 117 A321neos. VJC flexes diversity among aircraft manufacturers outside Airbus, when it starts taking delivery of Boeing 737 Maxes, VJC can receive 15 aircraft in 2019.
Covenant / Flight Global
* Source: Investment bridge