Why does Vietnam have so many start up airlines?

Vietnam has seen a flurry of start-up airlines emerge over the past few years. Several new carriers were set to provide more market competition before the COVID pandemic put everyone’s plans on hold. By why exactly is Vietnam home to so many start-up airlines ?

Vietnam is a growing market

Prior to COVID bringing the aviation industry to a halt, Vietnam’s aviation market was on the rise. The country had seen 20% growth over the past five years; growth that new start-ups were looking to capitalize on. The Vietnamese domestic market is lucrative and includes the Hanoi to Ho Chi Minh City route, the fourth-busiest domestic route in the world.

Vietnam itself is also very much on the up. The nation’s GDP has gone up by a whopping 225% over the past decade, and Vietnam continues to be one of the world’s fastest-growing economies. The aviation market in the country is growing for several reasons, including higher tourism levels, which necessitates more carriers to cope with demand. Additionally, restrictive foreign investment regulations make foreign entries into the Vietnamese air market unfeasible.

How many start-ups are there?

The aviation market in Vietnam is dominated by two airlines – Vietnam Airlines and VietJet – which make up a 75% share of the market. However, with high growth on the horizon and clear room for competition, start-ups have emerged to contest the duopoly.

Vietravel is one such recent addition. The company is one of Asia’s leading travel operators and is now trying its hand at aviation. The carrier received its license before the COVID pandemic but may be waiting a long time before acquiring a flight permit.

Bamboo Airways began operations in January 2019 and is surely the most ambitious of Vietnam’s start-ups. The carrier recently obtained approval from the U.S Department of Transport to operate non-stop flights from Vietnam to the United States. The carrier is also looking to break into the European market.

Yet another prospective airline in Vietnam is Kite Air, known locally as Canh Dieu Air. The start-up had planned to commence operations by Q2 2020 but has since put everything on hold indefinitely. According to the Hanoi Times, the airline failed to gain government approval in September and is unlikely to see any progress until 2022.

The future is uncertain for Vietnam’s start-ups

Due to the impact of the COVID pandemic, Vietnam authorities recently banned the creation of new airlines until 2022 at the earliest. With many of Vietnam’s start-ups still awaiting government approval, the latest news is a serious cause for concern. Nguyen Van The, Vietnam’s Minister of Transport, said,

“In the most optimistic scenario, only in 2022, the local aviation market could reach the result it did in 2019.”

On a positive note, Vietnam is doing well with regards to keeping the coronavirus contained. Officials in the country recently claimed its domestic aviation market was operating at pre-COVID levels, which places the country’s airlines in good stead once international travel opens up again.

By Luke Bodell – Simpleflying.com – December 7, 2020