WHY VIETNAM NEEDS SIX AIRLINES
Vietnam already supports five operating commercial airlines and a sixth is on the way. That’s because so many of the country’s newly minted middle class is literally going places.
Vietnam’s civil aviation authority estimates air passenger trafficwill reach 131 million by 2020 following average growth of 16% last year and this year. By 2030, the authority expects 280 million civilian air trips per year.
“All the airplanes are full. The Hanoi-Ho Chi Minh trip is packed every day,” says Mike Lynch, managing director with SSI Institutional Brokerage in Ho Chi Minh City. “They put up airlines and they just fill right up.”
One of the factors supporting that growth is the business travel that comes from rising foreign investment in low-cost manufacturing that requires factory visits, searches for supplies and conferencing with employees who may be spread from Hanoi to Tokyo.
Business travel, inbound and outbound tourism
Airlines are booming all over Asia on economic growth and the popularity of budget flying, but Vietnam’s passenger loads doubled the rest of Asia in 2017, business consultancy Dezan Shira & Associates says in a research note. That year, the consultancy says, 94 million passengers flew in Vietnam, including 13 million foreign nationals, up 16% over 2016.
Cheap labor has drawn foreign investors to Vietnam from developed regions of Asia to make furniture, car parts and electronics, to name just a few items. They are helping drive GDP growth of 6% to 7% per year. They also fly, as do their employees, partners and suppliers.