Vietnam Aviation Outlook in 2016

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Vietnam aviation market is growing fast with fierce competition. Although the growth rate reaches 20% in the first quarter of 2016, the airport infrastructure systems are not fully meet the demand.

Currently Vietnam Airlines (VNA) is at the last stage of the equitization process. Therefore, when the largest airline company of Vietnam finishes their equitization process, the majority of enterprises in this industry are joint stock companies.

Currently, Vietnam aviation industry has 137 aircraft teams with very young age (less than 6 years old) and the aircraft team is forecasted to increase rapidly in the coming time.

Domestic aviation market is increasingly fierce competition as VietJet Air has 31 aircrafts and VNA has 88 aircrafts, which are mainly serve domestic flights. However, while VietJet already accounts for 37% of the market, the market share of VNA fell below 50%. Accordingly, the competition in the domestic market is very fierce.

Furthermore, there are 53 foreign airlines joined with 3 domestic airlines. Accordingly, there are 48 domestic fly routes and 98 international fly routes, which are growing very fast with growth rate of more than 20% in the first quarter of 2016. Particularly Tan Son Nhat Airport has the strongest growth when accounting for 50% of market share.

The strong development of the aircraft teams have been identified as a huge pressure on the existing airport system. In a recent report on flight congestion, in the Lunar New Year period when travel demand increases, the congestion was limited. However, after the Lunar New Year period until now, the situation of delayed, canceled flights and congestion at the airport occurred more often due to unfavorable weather conditions.

Currently, Tan Son Nhat International Airport is under pressure to increase the load until the Long Thanh Airport goes into operation, which is expected until 2025. Moreover, the Department of Civil Aviation has set the direction and submitted to the Government by trying to bring Tan Son Nhat Airport to the design capacity of 40 million passengers/year, while relocating the whole military flight operations out of this airport.

In addition, other key projects are also being carried out according to plan. Among them, Da Nang Airport could be put into service for the Apec Conference in 2017; Cat Bi Airport is trying to put into operation before March 13th and Cam Ranh Airport is still deploying the construction of the 2nd runway.

For airports in the northwest area, currently there are many investors interested in the Lao Cai Airport project in the form of socialization. Lai Chau Airport is proposing to the Department of Defense to switch to civil airport; Na San Airport would like to retain the airport by the budget of the Ministry of Defense; Dien Bien Airport will organize study to rotate the shaft.

To overcome the congestion, delayed or canceled flights, the operating capability at airports and the training of air traffic control have been enhanced. At the same time, the Department of Civil Aviation has begun to send officials to pilot school in order to save the State budget for the rental of flight inspection as well as enhanced flight safety.

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