Red tape to go promises Vietnam’s regulators

by CHIEF CORRESPONDENT, TOM BALLANTYNE  

March 1st 2018

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Vietnam is forecast to create a boom in new domestic airlines as traffic numbers soar in a market served by only four scheduled carriers. Read More » Industry insiders estimate at least six more airlines will be required to satisfy accelerating commercial passenger demand.

New entrants preparing for the challenge include Vietstar Airlines, Tân Cảng Airlines and Bamboo Airways, with the latter already party to a Memorandum of Understanding with Airbus for A321neo jets. Bamboo hopes to launch operations next year, dependent on government approval of its Aircraft Operators Certificate (AOC).

Vietnam has a fleet of 180 aircraft operated by Vietnam Airlines, Jetstar Pacific, Vietjet and Vietnam Air Services Company (VISC). The country’s Ministry of Transport (MoT) wants to expand this number to 220 aircraft in two years and to 400 by 2030.

The MoT recently forecast annual passenger growth of 16% to 2020 and 8% a decade later. Passenger numbers will increase to 64 million passengers in the next two years and to 131 million in 2030, it said.

Statistics from the Vietnam National Administration of Tourism have reported that 6.5 million Vietnamese travelled overseas in 2016, a figure expected to surge by 9.5% in the next five years.

In February, the MoT completed a 2018-2020 draft plan for the country’s aviation industry and also outlined a vision for the sector to 2030. Details of the plan have not been disclosed. The ministry is collating industry feedback on its works before submitting the draft plan to the country’s department of prime minister.

Analysts familiar with the draft strategy said it contains conditions that will make it difficult for new airlines to be established, including demanding investment processes in addition to the three to four years it now takes to secure an AOC.

Congestion at some Vietnamese airports also is a hurdle. Government authorities already have postponed issuance of permits to Vietstar Airlines because of congestion at Tan Son Nhat airport. Tan Cang and Viet Bamboo Airlines have not submitted their documents to the Ministry of Planning and Investment, a process necessary for the start-ups, which make it unlikely they can be approved for take-off before 2021.

At a meeting last November deputy prime minister, Trịnh Đình Dũng, said adjustments were necessary to create a framework for future airline expansion.