Vietnam aviation industry is a business sector dedicated to manufacturing & operating all types of aircraft. The industry includes air transport service providers of passenger & cargo. The services of this industry are used by individuals and governments for the purpose of business (international, domestic, and regional). The key advantages are included quick service, natural route, no infrastructure investments, high speed, useful for agriculture, easy access, minimum cost, national defense and free from physical barrier. Apart from this, few of the disadvantages are included huge investments, more risks and high cost.
Vietnam’s aviation market is highly valued with a growth rate of 10% per annum. This growth percentage is twice as high as that of the region and the world, not only for transporting of passenger but also for logistics. The International Air Transport Association (IATA) is a trade association that assessed that country is the fifth fastest growing aviation market in the world. The size of the domestic Vietnamese aviation market has been expanded due to rapid expansion of the middle-class and strong travel &tourism sector.
According to study, “Vietnam Aviation Comprehensive Report Q4/2019” the key companies operating in the Vietnam aviation industry are Airports Corporation of Vietnam-JSC, Saigon Cargo Service Corporation (SCSC), VietJet Aviation Joint Stock Company, Southern Airports Services JSC, Airports corporation of Vietnam, Cam Ranh International Airport Services Joint Stock Company, NoiBai cargo terminal services JSC, Cam Ranh International Airport Services Joint Stock Company, Saigon ground services, Danang Airports Services Joint Stock Company, NoiBai Airport Services Joint Stock Company, NoiBai Catering Services Joint Stock Company. The aviation companies are enjoying the benefits of enhanced demand and decreased operation costs which in return will increase the profit margins.
Based on type, Vietnam aviation industry is segmented into military aircraft, commercial aircraft and general aviation. Military aircraft segment is further sub-segmented into combat aircraft and non-combat aircraft. Commercial aircraft is further sub-segmented into freight and passengers. Commercial aircraft segment is estimated to witness higher growth rate owing to rise in demand for new aircraft to cater to the increasing air travel during the forecast period. Additionally, general aviation is further sub-segmented into turboprop, helicopter, business jet and piston fixed wing.
The Vietnam aviation industry is driven by increase in the demand from emerging economies, followed by growth in improvement in technological advancements (new airplanes with improved economics and capabilities), lower air fares, high penetration of low-cost carriers, rise in tourism industries, growth in living standards, increase in demand in long-haul international services and growth in demand for new low-cost carriers deregulation. However, sustainability and safety issues associated with air transport may impact the market. Moreover, decrease in fuel prices and rise in the individual net income of middle class are key opportunities for market. Furthermore, volatility in fuel prices combined with maximum tax on aviation turbine fuel is a major challenge for market.
Vietnam country is top in Southeast Asia region in economic growth. In upcoming years, it is estimated that the Vietnam aviation industry market will be reached at rapid pace owing to expansion of international routes by domestic carriers, procurement of new generation commercial aircraft and growth in replacement of aging commercial aircraft during the forecast period.
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Ankur Gupta, Head Marketing & Communications