New entrant Vietravel to initially focus on soaring domestic market

New entrant Vietravel to initially focus on soaring domestic market

Vietravel expects up to 10 aircraft within five years for both domestic and international markets.

Vietravel – Vietnam’s top tour operator – had over one million customers last year, with half travelling by air.  Now it wants in on the action itself.

With its first A321ceo already arrived, and two more due by the end of the month, it plans to have up to 10 aircraft within five years. 

Unlike Vietnam’s soaring domestic and international markets, Vietravel’s projection appears considered and hardly excessive.

And while Vietravel will initially enter the fiercely competitive domestic market, its sights are on international operations. 

Although its network plans aren’t yet known for definite, it is believed that it will primarily concentrate on connecting the tourist hotspots of Da Nang, Nha Trang, and Phu Quoc – probably initially to Hanoi and Ho Chi Minh City.

In 2019, over 34 million passengers flew domestically across 63 routes, booking data reveals.  This was up by 19% YOY, partly driven by Bamboo Airways’ entrance in January of that year. 

The domestic market slowed significantly in 2017, up as it was by just 4%.  This was mainly from VietJet and then-Jetstar Pacific focusing on international expansion: VietJet’s international capacity grew by 125% YOY.  

In fact, VietJet and Jetstar Pacific’s domestic passenger volume declined in 2017, with Vietnam Airlines accounting for the growth. VietJet then intensified its effort, increasing domestic traffic by one-quarter in 2018 and overtaking Vietnam Airlines for the top spot.

New entrant Vietravel to initially focus on soaring domestic market

Vietravel will enter a burgeoning domestic market, although it will revolve more around international operations. Source: booking data via OAG Traffic Analyser.

Vietravel to enter fundamental markets; country revolves around top-10

Vietnam’s domestic market saw 15.2 million passengers added between 2015 and 2019 for an 80% increase and a CAGR of 12.5%.

The country revolves around its top-10 domestic routes, with these having over two-thirds of the total demand – a phenomenal amount. 

The top market, Hanoi to Ho Chi Minh City, had  7.7 million passengers, well over twice as many as second-placed Da Nang to Ho Chi Minh.

For Danang, Nha Trang, and Phu Quoc, traffic drops very significantly after the absolute core markets have been removed.  For example, while Phu Quoc’s top-10 markets had over 2.8 million domestic passengers, reflecting almost all of its demand, just 482,000 remain after Hanoi and Ho Chi Minh are removed.

Nha Trang (810,000) and Da Nang (1.3 million) do better by this measure, but the gap is still enormous.

It is no surprise that Vietravel will likely focus on core routes from these tourist hotspots, although it begs the question of underserved – or unserved – opportunities away from the largest metropolises for some operator.

Vietnam’s top-10 domestic routes Top-10 to/from Danang Top-10 to/from Nha Trang Top-10 to/from Phu Quoc
Hanoi – Ho Chi Minh 7,700,801 Ho Chi Minh 3,311,302 Ho Chi Minh 1,416,909 Ho Chi Minh 1,516,094
Da Nang – Ho Chi Minh 3,311,302 Hanoi 2,873,620 Hanoi 1,237,299 Hanoi 845,229
Da Nang – Hanoi 2,873,620 Hai Phong 335,795 Da Nang 308,506 Da Nang 159,326
Phu Quoc – Ho Chi Minh 1,516,094 Nha Trang 308,506 Hai Phong 217,073 Hai Phong 76,081
Ho Chi Minh – Nha Trang 1,416,909 Can Tho 295,445 Vinh 95,597 Hue 52,578
Hai Phong – Ho Chi Minh 1,417,776 Phu Quoc 159,326 Can Tho 47,927 Nha Trang 47,102
Ho Chi Minh – Vinh 1,285,441 Da Lat 98,232 Phu Quoc 47,102 Da Lat 39,429
Hanoi – Nha Trang 1,237,299 Buon Ma Thuot 77,995 Chu Lai 32,248 Can Tho 38,122
Hue – Ho Chi Minh 1,155,800 Vinh 30,462 Hue 31,658 Vinh 35,980
Ho Chi Minh – Thanh Hoa 939,298 Thanh Hoa 12,388 Thanh Hoa 29,646 Thanh Hoa 33,276
Source: booking data obtained from OAG Traffic Analyser.

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