Vietnam’s low-cost carrier Vietjet is seeking approval from the Civil Aviation Administration of Vietnam (CAAV) to be responsible for aircraft ground handling for flights to and from two busy airports, instead of relying on third-party service providers.
Aircraft ground handling is the servicing of an aircraft while it is on the ground and parked at a terminal gate of an airport.
Vietjet is seeking permission to service its own airplanes at the Noi Bai International Airport in Hanoi and the Cam Ranh International Airport in the south-central province of Khanh Hoa from January 1, 2020, it said in a document submitted to the aviation authority.
This means the no-frills carrier will cut ties with two contractors, Hanoi Ground Services (HGS) and Saigon Ground Services (SAGS), which it currently subcontracts ground handling to in the Hanoi and Khanh Hoa airports, respectively.
Vietjet currently operates 18 airplanes on 15 domestic routes and 16 international services with a frequency of 150 flights per day.
As the carrier plans to expand its fleet as well as increasing the number of flights in the near future, it believes that independently providing ground services for its aircraft will help enhance its service capacity and quality, thus strengthening its reputation.
|Different ground handling equipment and vehicles are seen at Noi Bai International Airport in Hanoi. Photo: Tuan Phung / Tuoi Tre|
Subcontracting aircraft ground handling to a third party means Vietjet may have to wait longer to get a stair truck for its flights, as the vehicle is busy serving airplanes of other carriers.
“We will avoid such inconvenience having our own ground services,” Vietjet leader told Tuoi Tre (Youth) newspaper.
In addition, the Vietjet leader thinks that the airline’s own employees will perform the services with more responsibilities than those from contracted companies.
While Vietjet’s proposal is being considered by CAAV, it has sparked concerns from HGS and SAGS, both of which claim that the budget carrier accounts for more than half of their respective services.
Particularly, HGS has served more than 10,000 Vietjet flights, or 62.3 percent of total flights it serviced in the first half of this year, while about 70 percent of SAGS’ services were delivered to the low-cost carrier in the same period.
About 450 HGS employees are being particularly tasked with servicing Vietjet flights, or 48 percent of the company’s workforce. The respective figures for SAGS are 240 employees and 60 percent.
In terms of business results, Vietjet contributed 28 percent and 37 percent to the total revenues from ground services of HGS and SAGS, respectively, in the first six months of 2019.
The two companies said that their revenues and profits will drop by 50 percent, and about half of their employees will be unemployed once Vietjet officially introduces its own ground handling services.
National flag carrier Vietnam Airlines has been using its own ground handling service since late 2015, when it launched the Vietnam Airport Ground Services Company Limited.