Viet airline industry soaring on local, foreign demand

Viet airline industry soaring on local, foreign demand
Managing director Luu Duc Khanh.

HANOI - Vietnam's fledgling airline industry is poised for a boom as local competition heats up with fleet expansions, new routes and planned share offers that are set to make it one of the world's three fastest-growing markets.

Even as the local economy chugs along at about 5 per cent growth, its slowest pace in 13 years, demand for domestic air travel is growing by double digits. That is translating into a surprisingly robust new source of business for Boeing, Airbus, and regional aircraft makers such as Mitsubishi Aircraft, Bombardier and Embraer SA.

The International Air Transport Association expects Vietnam to become the world's third-fastest growing market for international passengers and freight next year, and second-fastest for domestic passengers. Vietnam's Aviation Department expects 15 per cent growth in domestic passengers this year, more than double last year's 7 per cent rise.

Though starting from a low base, Vietnam's carriers will boost their fleets in the next few years, double or tripling them to serve a domestic market of 90 million people and tourist arrivals growing on average 20 per cent annually.

VietJet Aviation Joint Stock Co, Vietnam's first private airline, agreed last month to a provisional order for up to 92 Airbus jets worth US$9 billion (S$11 billion) at list prices.

The low-cost carrier is aiming for a stockmarket listing in either Hong Kong or Singapore in 2015 to fund the expansion, which would start with flights to Tokyo, Beijing, Singapore, Kuala Lumpur and South Korea, then eventually, China, Russia and Australia and beyond, managing director Luu Duc Khanh said.

"Further it could be the United States, where four million people of Vietnamese origin live. They're waiting for VietJet anxiously," he told Reuters in an interview.

VietJet plans to double its fleet by 2015 to 20 jets, and is speeding up work to get three joint ventures in the air, including one with an undisclosed carrier in Myanmar and another agreed with Thailand's KanAir, to operate in early 2014.

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