Private airlines ready for take-off - Vietnam Airlines

The first, Vietjet Air, is expected to launch its first domestic flights later this year or early next year.

Prime Minister Nguyen Tan Dung gave Vietjet the go-ahead last November to become the fourth aviation company in Vietnam, following State-owned Vietnam Airlines, joint-stock Pacific Airlines and cargo carrier Vasco (Viet Nam Aviation Services Co).

Vietjet CEO Nguyen Duc Tam vowed his carrier would provide services to most provinces.

Vietjet business manager Robert Hughes said the entry of private airlines would mark a turning-point in competition for the domestic aviation industry, one that would benefit both clients and service providers.

Hughes said he expected Vietnam Airlines and Pacific Airlines, in turn, to compete more vigorously in terms of service quality.

Vietnam Airlines CEO Nguyen Sy Hung said, "We accept the competition. To begin with, we have been devising strategies to compete and ensure stable market share."

Pacific Airlines has already found itself in a competitive stance with Vietnam Airlines, the national flag carrier with many years of experience.

In the race to occupy market share, the two airlines have made great efforts to expand domestic flights. Vietnam Airlines now operates 20 domestic flights while Pacific Airlines operates 17.

Nguyen Tien Sy, a public relations official with Pacific Airlines, said, "One of measures that both airlines are applying to attract passengers is to launch sales promotion programmes."

The air will soon get even more crowded. In late January, VietAir was also founded by a consortium of major stockholders, including the PetroVietnam Insurance Co.

Sai Gon Airlines and Air Speed Up are also reportedly in the process of applying for operating licences.

If all are granted licences, the domestic aviation market could become a much more highly competitive market. It’s a market with a total of 4.5mil passengers and 75,000 tonnes of cargo per year, say industry experts.

Under the Law on Civil Aviation, airlines seeking a business licence must have sufficient legal capital. An airline with a fleet of between one and 10 aircraft must have capital of at least VND200bil (US$12.5mil), for instance.

Airlines intending to fly international routes must have at least VND500bil ($31.2mil).

Foreign investors are allowed to invest in airlines in the form of joint ventures, with up to 49-per-cent stake.