More airlines are established, but will they take off?
The plans on setting up two new air carriers – Vietstar Airlines and SkyViet – have been submitted to the Prime Minister.
Vietstar Airlines plans to join the aviation market as a passenger and common goods air carrier. In the first five years of operation, it would provide services with the fleet of three Boeing 737/Airbus 320.
The investor has presented the contract on chartering three Boeing 737s it signed with a leasing company.
Regarding the investment capital, the audited finance report showed that the company’s charter capital was VND800 billion at the end of 2015.
The target markets for Vietstar Airlines are the north-south route, Northeast Asia and Southeast Asia.
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In late October 2007, the then Prime Minister allowed Vietnam Airlines to build up a plan to establish a joint stock airline by reorganizing VASCO.
On December 30, 2015, the representative of the state, the biggest capital contributor in Vietnam Airlines, officially sent a dispatch asking for the approval of the establishment of joint stock airline on the basis of VASCO.
Vietnam Airlines would contribute 51% of capital, of which VND53.7 billion would be in cash, and the remaining in aircraft, machines and equipment.
The other two big shareholders would be Techcom Capital, which contributes 48% of charter capital and Techcomdeveloper 1%.
The shareholders of SkyViet believe that the air carrier would be able to make profit in the first year of operation, while the profits would be increasing gradually in the next years.
However, the Ministry of Transport is not so optimistic, predicting that the air carrier will meet some difficulties.
The domestic aviation market is listed among the 10 fastest growing markets in the world with the growth rate of 20-24%.
Indochina Airlines and Air Mekong ‘died young’ just after several years of operation. Pacific Airlines, the predecessor of Jetstar Pacific, experienced a long period of taking losses.
Experts said the future of the new airlines remain unknown, showing their doubts because of their their small charter capital.
“Is VND800 billion is enough for an airline to take off?” an expert said.
Vietstar Airlines wants to exploit the north-south route. This means that it would have to compete with three other service providers.
Meanwhile, the other air routes is described as unpromising, especially in low season.
Lai Xuan Thanh from the Civil Aviation Authority of Vietnam (CAAV) thinks that the presence of SkyViet and Vietstar Airlines would not have a big impact on the aviation market until three to five years.
