Competition increases in Vietnam’s aviation sector

Growing demand for air travel during national holidays, especially the lunar New Year (Tet) has heated up competition in Vietnam’s aviation sector.

Vietnamese airlines have launched a stream of promotions for both domestic and foreign routes. In an effort to attract customers, the national flag carrier Vietnam Airlines is offering 50% discounts for domestic flights, while low-cost carriers such as VietJet Air and Jetstar Pacific are also running special promotions with thousands of gifts up for grabs.

In recent years, ticket prices have fallen remarkably, with VietJet Air offering tickets starting from VND0 from 12h-14h every day.

The Vietnamese aviation has also seen a keen competition in service quality. The national flag carrier added two new-generation aircrafts – the Airbus A350-900 and Boeing 787-9 – as well as tens of A321 and B787 planes to its fleet. The carrier also launched its new corporate identity as part of the “four-star service upgrade” strategy, smartening up its image and bringing convenience to customers.

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With support from Vietnam Airlines after the shake-up process, Jetstar Pacific Airlines also outlined a plan to upgrade its fleet as well as fine-tune its services.

Vietjet Air also brought a breath of fresh air to the aviation sector when it decided to expand its fleet from 20 to 30 planes. The carrier has conducted purchase-and-rent transactions for over 100 aircrafts with Airbus. In addition to its existing services, VietJet Air also launched top-notch service Skyboard, eying high-income customers to diversify its products.

Regarding market segment, the competition moves from key flying hubs Hanoi- Danang- Ho Chi Minh City to short flights connecting Hanoi- Chu Lai, Haiphong- Cam Ranh, Vinh- Buon Ma Thuot.

In 2016, Vietnam Airlines will transfer domestic routes to Jetstar Pacific Airlines and ATR72 aircraft to Vietnam Air Services Company (VASCO), aiming to restructure and improve the aviation network, while diversifying the services of the three air service providers.

According to statistics from the Civil Aviation Authority of Vietnam (CCAV), in the first 11 months of 2015, domestic airlines transported 36.73 million passengers, an increase of 22% from the previous year’s same period. Vietnam Airlines held the largest market share with 47.3% of domestic customers, followed by VietJet Air (36.2%) and Jetstar Pacific Airlines (14.8%).

The International Air Transport Association (IATA) has forecast that Vietnam will be among the world’s seven fastest-growing aviation markets from 2014-2017.

IATA General director Tony Tyler said the Vietnamese aviation sector has contributed US$6 billion to Vietnam’s GDP and created over 230,000 jobs. Between 2008 and 2013, Vietnam’s passenger traffic grew by 96%, he added.