With state-owned airline Vietnam Airlines JSC and budget carrier VietJet Aviation JSC operating considered one of the world’s busiest routes, developer FLC Group JSC wants a chunk of the motion with the brand new airline, which serves 37 routes within the country after its inaugural flight in October.
The recent airline, called Bamboo Airways, still needs a government aviation license before operating and is in search of to capitalize on the country’s growing middle class and rapidly growing tourism industry.
The International Air Transport Association predicts that Vietnam can be among the many five fastest-growing air travel markets on the earth inside the following 20 years. According to IATA, the connection between Hanoi and Ho Chi Minh City was already the sixth on the earth when it comes to passenger numbers last yr. According to the Hanoi Central Statistical Office, the aviation industry served 23.6 million passengers in the primary half of the yr, a rise of 15 percent in comparison with the identical period last yr.
“Thanks to a good investment, well-prepared staff and new aircraft, we will become a giant immediately after launching the airline,” said CEO Trinh Van Quyet in an interview in his office in Hanoi. The Civil Aviation Authority of Vietnam said the carrier had met “sufficient conditions” to operate the flight in October and a flight license could be issued soon, he added.
FLC shares rose as much as 2.5 percent on Wednesday, while the benchmark VN Index was little modified. Shares rose 0.9 percent as of 10:05 a.m. local time, hitting their highest level since January.
According to a transport ministry official, Bamboo Airways’ proposal is into consideration. Still, the brand new airline may struggle to interrupt into Vietnam’s aviation market, which also includes budget carrier unit Vietnam Airlines and a three way partnership with Jetstar Pacific.
“Anyone entering the market now is late,” said Brendan Sobie, a Singapore-based analyst on the CAPA Center for Aviation. “We are dealing with saturation of the domestic market. The international market is likely to slow down in a few years.”
According to Sobi, annual seat growth in Vietnam has dropped to single-digit levels over the past 18 months after growing well above 20 percent annually within the previous 4 years. He added that seat growth on international routes is accelerating, reaching around 20 percent annually over the past three years.
Quyet said Vietnam’s growing middle class and government efforts to make tourism a serious industry are enough to create space for the brand new carrier to succeed.
He added that Bamboo Airways will initially use 20 leased narrow-body and wide-body aircraft. Parent company FLC has agreed to purchase 24 Airbus SE A321neo aircraft for Bamboo Airways price $3.2 billion at list price. In June, it signed a commitment to buy 20 Boeing Co. twin-aisle 787-9 Dreamliner aircraft. for a listing price of $5.6 billion. Quyet said that sixty percent of the capital needed to buy the aircraft can be financed by financial organizations, adding that the funds have already been arranged. The company expects full delivery of all aircraft by 2022.
The airline, which has a registered capital of VND 1.3 trillion ($56 million), plans to launch 50 international routes to countries similar to Russia, Germany, France, England, Japan and China in 2019, the president said.
source: Bloomberg
