Sunday, September 16, 2007

Vietnam's aviation business growing fast

Foreign firm plans private air carrier in Vietnam

Another foreign-invested company has applied to set up a private airline in Vietnam, according to the Vietnam Civil Aviation (VCA).

The Hanoi-based T&C Investment Joint Stock Company sent an open letter last week to VCA revealing that a plan would be submitted to authorize agencies in the near future.

Established in 2006 with a chartered capital of US$6.25 million by Goldkey International Company and TAIT Asia Ltd, T&C specializes in technology and construction products and services and logistics.

VCA said it has also received a proposal from the local firm Vietjet Aviation Joint Stock Company.

Before T&C and Vietjet, the Saigon Aviation Joint Stock Company (Sai Gon Airlines) had expressed its wish to establish a private airline.

Also recently, Malaysia’s AirAsia, the largest budget airline in Southeast Asia, has signed an agreement with Vinashin, Vietnam’s largest shipbuilder to establish a joint venture no-frills carrier in the country.

Of Vina AirAsia’s $30 million in capital, AirAsia would hold a 30 percent while Vinashin would control the rest.

The new airline will serve domestic, regional and international routes, and eventually build two distinct divisions to facilitate short and long-haul aviation.

Under Vietnam’s aviation regulations, an airline company must have minimum capital of VND500 billion ($30.8 million) to operate international flights from Vietnam.

Besides the required capital, the applicant must meet several safety and security requirements.

Vietnam is the home to three airlines including Vietnam Airlines, the national flag carrier, Pacific Airlines – 30 percent owned by Qantas Airways Ltd. – and Vasco, Vietnam Air Services Co.

Vietnam Airlines covers more than 80 percent of the domestic civil air transport market, while Pacific Airlines and VASCO control the remainder.

Demand for air transport in Vietnam is expected to grow at over 20 percent a year on the back of the country’s business opportunities after WTO membership and its rapid growing economy as well.

Vietnam is planning to quadruple its airport capacity by 2020, according to CVA.

By 2010, around $1 billion will be spent on airport development, while another $1.8 billion will be spent from 2011 to 2015 and a further $2.7 billion between 2016 and 2020.

Passenger and freight traffic are forecast to continue growing strongly through 2010, requiring aggressive airport expansion initiatives.

The country’s total airport capacity will be increased by 250 percent by 2015 and by 400 percent by 2020.

Currently there are 22 airports in Vietnam, three of which are international facilities in Hanoi, Ho Chi Minh City and Danang.