What happened to the Vietnam aviation market when Bamboo Airways officially joined the game?

In the period 2016-2020, according to VIRAC’s estimates, the annual double growth rate will reach 9.29% and reach 74.5 million customers in 2020, including 42.2 million domestic customers and 32.3 million international customers.

Vietnam aviation industry is about to enter a booming period when the demand for air transport is constantly increasing and the competition among domestic airlines is becoming more intense. In particular, the recent Bamboo Airways launch event is a good sign for the development of transport in particular and the tourism industry in general.

Bamboo Airways’ strategy is to focus on non-stop international flights to tourist destinations, including localities with FLC projects such as Quy Nhon, Quang Ninh, Hai Phong, Thanh Hoa, Phu Quoc and Nha Trang. … in order to save time and effort of traveling of the tourists, avoid unnecessary transfer points.

According to VIRAC, Vietnam air transport market has the participation of 63 foreign airlines from 25 countries / territories with regular international flights to Vietnam.

Foreign airlines and 3 Vietnamese airlines (Vietnam Airlines, VietJet Air and Jetstar Pacific Airlines) are exploiting 105 international routes. Also according to this company, in 2017, VietJet Air with 43% market share, Vietnam Airlines with 42% is always in the list of airlines holding the largest market share. In addition, Jestar Pacific, despite its small market share, recorded positive growth in the first half year.

Domestic market share, 2011-2017 (Source: VIRAC)

In particular, VietJet Air has successfully applied the cheap airline ticket model. Its revenue has continuously grown over the years at 2 digits, reaching 27,500 billion VND in 2016, and reaching 42,300 billion VND  in 2017, a remarkable increase of 40% and 54% compared to the previous year.

In 2018, this airline reaches the total revenue of 52.400 billion VND, an increase of 24% compared the previous year; the total profit before tax reached 5.830 billion VND. The revenue of air transport reached 33.815 billion VND, an increase of 49% compared to the previous year.

Meanwhile, Vietnam Airlines also maintained a high growth rate with the revenue in the first 9 months of 2018 reaching nearly 73.000 billion VND, an increase of 18% compared to the same period of last year.

The business situation of Jetstar Pacific is also quite impressive in the period of 2017-2018 when the revenue in the first 7 months has increased by more than 523 billion over the same period last year, exceeding the plan 6 times.

Besides successful airlines today, the leading Southeast Asian airlines such as AirAsia and Lion are planning to set up joint ventures in Vietnam. In addition, VietStar – another domestic airline – has recently been licensed and plans to start providing services from the end of this year or early next year. If the Vietnam AirAsia of AirAsia and Batik Vietnam of Lion Group is put into operation in Vietnam, the market will become more competitive than ever. Recently, the largest travel agency in Vietnam, Vietravel, also mentioned about joining a new airline.

The fact that Bamboo Airways officially entered the aviation market has created advantages and difficulties, especially for the market with great potential but not as easy to exist as aviation. It requires the company to use appropriate business strategies, and also need significant support from the government in improving the infrastructure and flight planning.

In the period 2016-2020, according to VIRAC’s estimates, the annual double growth rate will reach 9.29% and reach 74.5 million customers in 2020, including 42.2 million domestic customers and 32.3 million international customers. The growth rate of domestic customers will continue to increase at 10.56% and with international customers, the growth rate will be  at 7.73% in the period of 2016-2020. This shows a great potential of this market beside an extremely intense competition.


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