Vietnam airlines plan fleet boom as roads and rail fail

Mon Oct 21, 2013 5:06am EDT
 
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By Ho Binh Minh

HANOI (Reuters) - Vietnam's fledgling airline industry is poised for a boom as local competition heats up with fleet expansions, new routes and planned share offers that are set to make it one of the world's three fastest growing markets.

Even as the local economy chugs along at about 5 percent growth, its slowest pace in 13 years, demand for domestic air travel is growing by double digits. That is translating into a surprisingly robust new source of business for Boeing Co (BA.N: Quote), Airbus EAD.PA and regional aircraft makers such as Mitsubishi Aircraft Corp (7011.T: Quote), Bombardier Inc (BBDb.TO: Quote) and Embraer SA

(EMBR3.SA: Quote).

The International Air Transport Association expects Vietnam to become the world's third-fastest growing market for international passengers and freight next year, and second-fastest for domestic passengers. Vietnam's Aviation Department expects 15 percent growth in domestic passengers this year, more than double last year's 7 percent rise.

Though starting from a low base, Vietnam's carriers will boost their fleets in the next few years, double or tripling them to serve a domestic market of 90 million people and tourist arrivals growing on average 20 percent annually.

VietJet Aviation Joint Stock Co, Vietnam's first private airline, agreed last month to a provisional order for up to 92 Airbus jets worth $9 billion at list prices.

The low-cost carrier is aiming for a stock market listing in either Hong Kong or Singapore in 2015 to fund the expansion, which would start with flights to Tokyo, Beijing, Singapore, Kuala Lumpur and South Korea, then eventually, China, Russia and Australia and beyond, Managing Director Luu Duc Khanh said.

"Further it could be the United States, where 4 million people of Vietnamese origin live. They're waiting for VietJet anxiously," he told Reuters in an interview.   Continued...

 
Vietjet Air passengers exit the aircraft after arriving at Tan Son Nhat airport in Vietnam's southern Ho Chi Minh city October 20, 2013. REUTERS/Kham