Why this is important to Wisconsin businesses: It ranks as the seventh-fastest-growing aviation market in the world, creating opportunities for Wisconsin companies to provide parts, supplies and services for infrastructure construction and upgrades, air traffic enhancements, maintenance and repair operations, and capacity building.
In 2018, the International Air Transport Association ranked Vietnam as the seventh-fastest-growing aviation market in the world, with an average growth rate of about 17%. Leveraging this growth are the country’s aviation players who recently announced significant fleet expansions or new airline launches.
In February 2019, U.S. President Donald Trump, Vietnamese Communist Party General Secretary and President Nguyen Phu Trong, and leaders from Vietnam's biggest low-cost carrier, Vietjet, and global giant Boeing, unveiled Vietjet’s $12.7 billion order of 100 Boeing 737 MAX planes.
According to Boeing, the deal includes 20 MAX 8s and 80 of the new, larger MAX 10 variant, which will have the lowest seat-mile costs for a single-aisle airplane and is the most profitable jet in its market segment. In ordering 80 MAX 10s, Vietjet becomes the largest Asian customer of this airplane type. Back in 2016, Vietjet placed its first order of 100 737 MAX airplanes; thus, the 2019 order takes the carrier's MAX order book to 200 jets.
Vietjet has also tapped Boeing to enhance its technical and engineering expertise, train pilots and technicians, and improve management capabilities at the airline and in Vietnam more broadly. Boeing's digital solutions are being used by Vietjet to optimize its operations, including flight planning and tech logbooks. As Vietjet looks to meet the demand of domestic and international passengers, the carrier continuously invests in convenient utility services for customers and in expanding its flight network.
Vietjet is the second-largest carrier in Southeast Asia by market capitalization, just trailing Singapore Airlines. Despite being no-frills, it has top-of-the-line aircraft with superior fuel mileage. Vietjet’s average cost per seat, not including fuel, adds up to just 2.25 cents per kilometer, which is reportedly the lowest among global airlines, according to an article from Vietnam Economic Times. Currently, the carrier operates 385 daily flights to 105 domestic and international destinations.
Meanwhile, a month before Vietjet announced its new order of planes from Boeing, Vietnamese property and leisure company FLC Group launched Vietnam's newest and fifth carrier, Bamboo Airways, with a charter capital of $30.8 million (VND 700 billion).
Presently, Bamboo Airways has seven aircraft, all from Airbus: one A319-100, one A321neo, and five A320ceo (three of which are wet-leased from Freebird Airlines). It also has on order 24 A321neos from Airbus and 30 Boeing 787 widebody jets worth around $8 billion at list prices. Bamboo Airways currently operates 42 flights to 14 domestic destinations, with plans to fly to Japan, South Korea and Singapore later this year, and eventually to Europe and the U.S. In the face of tough competition, the carrier is offering routes to lesser-known destinations in Vietnam, which are currently underserved by its competitors.
Bamboo Airways is not the only startup carrier looking to get a piece of the aviation market in Vietnam. Malaysian budget airline AirAsia signed an agreement with Vietnamese company Hai Au Aviation to launch a low-cost carrier in Vietnam before the end of 2019. This venture has set an ambitious goal of capturing 20% to 30% of the Vietnamese market within a decade.
Being the economy in Southeast Asia with the fastest economic growth in recent years has brought Vietnam a growing middle class and a boom in tourism, with more than 100 million passengers—an all-time-record—passing through the country’s airports in 2018. Vietnam's airports also handled nearly 1.5 million tons of cargo, up almost 8%, according to the Civil Aviation Authority of Vietnam.
The Hanoi Times reported that the Vietnamese government has recently approved the revision of the national aviation transport development plan through 2020, with a vision through 2030. Under the plan, Vietnam’s number of aircraft will grow by more than 220 units by 2020 and 400 units by 2030, increasing by 70 to 100 units over the previous plan.
The continuous expansion in Vietnam's aviation market provides opportunities for Wisconsin companies to provide parts, supplies and services for infrastructure construction and upgrades, air traffic enhancements, maintenance and repair operations, and capacity building. For example, Vietnam will need nearly 3,000 pilots by 2020 for commercial flights, which is 1,000 pilots more than what the country has today, with training often done overseas.