VNBusinessNews.com - At a seminar titled “Solutions for Vietnam’s aviation sector to overcome crisis” held yesterday by Thoi Bao Kinh Te Viet Nam and Vietnam Civil Aviation Department, Lai Xuan Thanh-vice head of the department spoke that the country now has five carriers including Vietnam Airlines with 49 planes, Jetstar Pacific with four aircrafts, VietJet Air starting to launch flights with four planes, Indochina Airlines with 2, Mekong Airlines that plans to start flights from 2010 early by two 100-seat planes on a Hanoi-Phu Quoc route.
Additionally, there are extra 43 foreign air firms launching flights from/to Vietnam against 18 companies of 2002.
By 2015, Vietnam’s aviation sector will have about 149 plans with a estimated supply of 35 million passengers a year including 19.5 million international and 15.5 million domestic passengers, he added.
However, compared with Asean countries, Vietnam’s aviation size ranks the sixth before Brunei, Cambodia, Laos and Burma and after Thailand (with estimated 60 million passengers), Malaysia (47 million) and Singapore (40 million).
Despite the advantages of a large population, a narrow and stretched terrain and dense airline network, which are favourable for developing domestic aviation sector, till date only domestic flights on North-South route can bring in profit. Vietnam Airlines as the national carrier still is responsible for carrying out flights for social and economic services.
But as for international routes, both domestic and foreign air firms including leading carriers are entering a very fierce competition. According to Thanh, the biggest difficulty of Vietnam’s aviation is the too heavy dependence on foreign factors, especially human resources and decisive factors for production costs. Factually, Vietnam Airlines has to use 30% of foreign pilots, Jetstar 90% and Indochina Airlines 100%. The country has not had the civil pilot training school so 100% of Vietnamese pilots must be sent to foreign countries for training with a high fee of $130,000 each person.
Moreover, Vietnam still has to rent or buy jet fuel, aircraft accessories and materials from foreigners with the rental accounting for 32-40 percent of finished price. Over 80 percent of aircraft maintenance service must be outsourced.
Meanwhile, Vu Ba Phu-vice chief of Ministry of Industry and Trade’s Competition Management Department proposed, in order to escape from the standstill of the global aviation service, air firms are required to upgrade competitive strength along with the government’s support and effective investment packages.
Thus, air companies should study current policies and laws thoroughly and ask advice of management agencies as implementing competitive strategies on the domestic market.
Quoting Luong Hoai Nam, general director of Jetstar Pacific Airlines, one of the most effective measures to help air firms overcome difficulties is that the state needs to remove the airfare ceiling price mechanism which is beneficial for consumers but these companies are disallowed to hike airfares exceeding the ceiling level just in the peak time when the travelling demand could surge 2-3 times against the normal period. (TBKTVN)