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Vietnam’s flag carrier domestic market share drops as budget airlines rise

Saturday, November 21, 2015, 09:26 GMT+7
Vietnam’s flag carrier domestic market share drops as budget airlines rise
A worker pumps fuel into a Vietjet Air A320 aircraft, in front of a Vietnam Airlines aircraft at Tan Son Nhat airport in Vietnam's southern Ho Chi Minh city October 20, 2013.

The Vietnamese national flag carrier has lost nearly ten percent of its share in the domestic market to two low-cost carriers in the year to October, the country’s aviation watchdog has said.

Vietnam Airlines still grabbed the biggest slice of the cake, with a domestic market share of 47.6 percent, in the first ten months of this year, according to a report by the Civil Aviation Authority of Vietnam (CAAV).

The share, however, dropped nine percent from 56.6 percent in the same period last year.

Budget carrier Vietjet made up for 35.7 percent, a 6.9 percent increase from a year earlier, whereas Jetstar Pacific accounted for 14.9 percent, a 1.9 percent year-on-year rise, according to the report.

The remaining share belonged to the Vietnam Air Service Co. (VASCO).

In the Jan-Oct period in 2014, Vietjet accounted for 28.8 percent of the domestic market, and Jestar, 13 percent.

As of the end of October, Vietnam’s domestic airlines have served collectively 25.6 million passengers, up 26.9 percent year on year, and 198,000 metric tons of cargo, a 5.1 percent increase from a year earlier, according to the report.

Vietnam Airlines accounted for 14.6 million passengers, up 9.3 percent year on year, and 148,000 metric tons of good, down 4.1 percent.

The national flag carrier posted a seat occupancy rate of 83.8 percent, two percentage points higher than the same period last year.

Jetstar Pacific carried around 3.2 million passengers in the ten-month period, up a massive 54.5 percent from the same period last year, and 12,000 metric tons of goods, a 57.1 percent year-on-year increase. The budget carrier’s seat occupancy rate declined 2.7 percentage points to 85.3 percent.

Vietjet handled 7.4 million passengers, up 66.1 percent, and 38,000 metric tons of cargo, up 42.6 percent. Its seat occupancy rate also went down 0.5 percentage point to 88.4 percent.

VASCO served 330,000 passengers, a 43.7 percent increase from the same period in 2014. It enjoyed a seat occupancy rate of 77.2 percent, down 3.1 percentage points from a year earlier.

The Vietnamese airlines have a total of 127 planes, with an average fleet age of 5.6 years old. The carriers own 51 planes and lease the remaining 76 aircraft.

Only two profitable airports

Vietnam currently has 22 airports, including seven international terminals, all of which are operated by managed by the Airports Corporation of Vietnam (ACV).

The country’s two biggest airports, located in Hanoi and Ho Chi Minh City, are the only terminals that operate at a gain, whereas the other 20 terminals are making losses, the ACV admitted at a meeting in Ho Chi Minh City on Thursday.

ACV is expected to log a post-tax profit of VND1.7 trillion (US$75.89 million) in 2015, thanks to profit from the Hanoi’s Noi Bai International Airport and its Ho Chi Minh City counterpart, Tan Son Nhat.

In 2014 Tan Son Nhat served more than 22 million passengers and posted earnings of VND3.6 trillion ($160.71 million), while Noi Bai raked in VND2.5 trillion ($111.61 million) from 14 million passengers.

The profits are used to make up for the losses of the other terminals across the country.

Most of the loss-making airports are of small scales and receive few passengers, and thus never operate in full swing.

The ACV is slated to go public next month and will launch an initial public offering to sell 77.8 million shares on December 10, the company said at the Thursday meeting.

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