Vietnam: ASKs up 12% in October 2013; VietJetAir triples domestic capacity, but Vietnam Airlines remains the leader
Home to a population of more than 90 million, Vietnam has experienced a dynamic economic growth in recent years and, according to the IMF, is set to become the world’s 17th largest economy by 2025. Benefiting from this favourable climate is the aviation industry; in fact, air capacity (as measured in ASKs) doubled since 2005 for international traffic, while domestic services noted an impressive 304% growth. As the country’s fastest-growing airline, VietJetAir, launches two new routes this week, anna.aero examines the Vietnamese market.
Domestic capacity +15.2%
Analysis of Innovata’s ASK data indicates that around 38 million one-way seats were offered on routes involving Vietnam, 11.7% more than in the previous year. At 15.2%, domestic capacity noted a slightly larger growth than international services, for which an annual change of +9.9% was recorded this October.
Overall, looking at capacity data since 2005, the domestic market has by far outdone the international sector in terms of growth dynamics, even though the latter doubled in size over this period. In 2005, just over 3.4 billion ASKs were offered in the domestic market in Vietnam; in 2013, this number is expected to reach 13.8 billion.
VietJetAir is #2 domestically
Vietnam’s flag carrier and largest operator, Vietnam Airlines commands 67.5% of weekly domestic seats this October, a market share nearly seven percentage points smaller than in the corresponding period of 2012. The airline, which added 6.5% frequencies and 15.2% seats to its domestic network, saw its own market share deteriorate as a result of an increased activity from privately-owned airlines.
|% change||Market share
|Difference vs Oct 12|
|Vietnam Airlines||224 567||194 880||15.2%||67.5%||(6.8pp)|
|VietJetAir||63 420||20 234||213.4%||19.1%||11.3pp|
|Jetstar Pacific Airlines||44 640||38 479||16.0%||13.4%||(1.3pp)|
|Air Mekong||0||8 484||(100.0%)||0.0%||(3.2pp)|
|Source: Innovata Oct 13 vs Oct 12|
VietJetAir, Vietnam’s first privately-owned airline, which was launched in December 2011, has added seven domestic routes since October 2012. The carrier now operates on 10 routes within Vietnam and commands a market share of 19.1%. As a result, Jetstar Pacific Airlines, which has added 16% seats this October compared to the same month of 2012, is now the country’s third largest domestic carrier. Vietnam’s fourth carrier, Air Mekong, suspended all its services as of 1 March 2013 and no resumption date has been indicated since. In 2012, the airline had a 3.2% seat capacity share in Vietnam’s domestic market.
Bangkok is #1 international destination
More than 60% of Vietnam’s international seat capacity is allocated on routes from Ho Chi Minh City. Hanoi, the country’s capital and the second-largest city, commands a third of international seats, while Da Nang, the up-and-coming Vietnamese resort city has a 4.5% share this October, compared to 2.4% last year. Vietnam Airlines is the largest operator of international routes, and the 376 weekly frequencies it offers win it 39.8% of the market. The remaining capacity is split between numerous carriers, none of which has more than a 5% share of weekly seats. Seven new carriers have entered the international market to Vietnam since October 2012. These include VietJetAir (daily services from both Ho Chi Minh City and Hanoi to Bangkok), Etihad Airways (daily flights from Abu Dhabi) and Finnair’s thrice-weekly frequencies from Helsinki, which commenced in June.
Singapore and Bangkok virtually share the #1 top international destination title, with the Thai airport attracting marginally less weekly frequencies this October (9.9% market share vs 11.2%), but slightly more seats (11.8% vs 11.3%). However, if we take into account Bangkok’s secondary airport, Don Mueang, the Thai capital becomes #1, commanding a total of 12.9% weekly frequencies and 14.2% seats from Vietnam.