Strong tailwinds lift Vietnam’s aviation sector

Strong tailwinds lift Vietnam’s aviation sector

Vietnam's aviation sector has shown strong growth since the start of the year, driven by robust business performances and new, well-funded investors.

According to the Civil Aviation Authority of Vietnam (CAAV), international passenger traffic (including charter flights) reached approximately 3.9 million in March, a rise of close to 8 per cent on-year.

Photo: baodautu.vn

All international routes witnessed growth, with India leading at over 26.5 per cent, followed by the Middle East at almost 26 per cent and Europe over 22 per cent.

For the full first quarter (Q1), international passenger volume reached 11.7 million, a rise of more than 13 per cent on-year, surpassing projections by 2 per cent.

Domestic travel also saw steady growth, with passenger volume surpassing 3 million in March, up 6 per cent on-year and 5 per cent above forecast.

Total domestic passengers in Q1 exceeded 9 million, up over 3.5 per cent on-year and exceeding projections by close to 2.5 per cent.

Two crucial factors-fuel prices and exchange rates-have shifted in favour of airlines. March’s jet fuel price was $91.69 per barrel, $8.74 lower than planned and down $11.61 on-year.

Favourable foreign exchange movements have also improved cash flows for airlines operating international routes, boosting airline earnings and encouraging new market entrants even more.

By the end of March, a domestic conglomerate reportedly submitted its investment proposal to the Ministry of Finance for establishing a new full-service carrier (FSC).

The proposed airline would offer high-quality service combining traditional FSC and charter flight models, serving key tourism and business destinations- both in Vietnam and globally.

If approved, the airline would also engage in cargo transport, positioning itself as a key player in the air freight logistics chain.

With an initial charter capital of VND1 trillion ($40 million), the airline plans to launch operations in 2026 with six aircraft, eventually expanding to 21, including wide-body Boeing 787s or Airbus A350s. This could significantly impact market share in both passenger and cargo segments.

In a related development, local multi-field T&T Group is making its presence felt at Vietravel Airlines, after becoming a strategic shareholder four months ago.

The carrier, formerly part of the Vietravel ecosystem founded by Nguyen Quoc Ky, who is now acting as the airline’s strategic advisor, is undergoing a leadership transition.

Industry insiders describe T&T’s involvement as, 'the right people at the right time', potentially helping the airline recover from its most challenging period since launching in late 2020.

Currently, Vietravel Airlines operates only one A320 aircraft-down from the three it originally registered with CAAV. From the start of the year to mid-March, it served 195,000 domestic passengers and 55,766 international travellers.

Do Quang Hien, founder and chairman of T&T Group, said, "We are committed to restructuring Vietravel Airlines and transforming it into one of Vietnam’s leading carriers, with aspirations to expand across the region."

Hien gave the remark at Vietravel Airlines’ extraordinary general shareholders meeting in Ho Chi Minh City on April 1.

According to T&T leadership, Vietravel Airlines will become a key link in the group’s broader infrastructure-logistics-aviation ecosystem, encompassing Quang Ninh Port, Quang Trị Airport, the Vietnam SuperPort logistics hub in Vinh Phuc, Nam Phuc Tho industrial cluster, and an integrated aviation-logistics-commercial-urban complex in Quang Tri.

"In addition to our strategy of developing Vietravel Airlines as a tourism-focused passenger airline, T&T Group has long-term plans to expand into air cargo, aiming to build a regional air freight hub," Hien added.

VIR