Aviation market: is there space for newcomers?

The news that Air Mekong will officially join the domestic aviation market in October 2010 with a fleet of four aircraft is really remarkable information for both air carriers and travel firms. Some wonder how a market newcomer can compete with well-established airlines.

Airlines can profit if they can choose suitable air routes. The Indochina Airlines failure should be seen as a big lesson for new air carriers, aviation experts say.

Having just taken a position as Commercial Director at Air Mekong, Truong Thanh Vu is very cautious about the details of the airline’s business plan. Vu noted that the aviation market now has a high growth rate, so it is the right time for air carriers to join the market.

Air Mekong is making hectic preparation for its first commercial flight slated for October 2010. Air Mekong will fly on Hanoi, HCM City – Phu Quoc, Hanoi,HCM City – Da Nang, Nha Trang Da Lat routes. The airline has also asked for permission to fly on HCM City – Con Dao, Buon Ma Thuot, Hai Phong and Vinh routes.

As such, the new air carrier has clearly shown its strategy on developing tourism air routes with high demand. Currently, the HCM City – Phu Quoc Island air route is considered the “golden air route” with very high demand. However, to date, only Vietnam Airlines has been providing flights. Passengers must regularly wait several weeks to purchase tickets.

A senior executive of an airline observed that the number of passengers is very high, while the Phu Quoc island poor infrastructure makes big aircraft unable to land. Air Mekong will provide flights on the route with jet-planes, which will help increase its competitiveness with Vietnam Airlines, which uses ATR propeller planes. “Even if Air Mekong sets the air ticket price a bit higher, it will still be able to attract passengers,” he noted.

The main competition in the aviation market now is the competition between Vietnam Airlines and Jetstar Pacific Airlines. Air Mekong, as the new comer on the market, would not be foolish to confront the two “elderly brothers”, while it will focus on developing the air routes which are not the advantages of the “brothers”. Of course, the two elderly airlines well understand the great potentials of the “golden air routes”, but they cannot cover everything.

Aviation market will be hot

Vo Huy Cuong, Head of the Air Transport Division of CAAV, also thinks that Air Mekong has decided to join the market at a reasonable time. According to Cuong, the domestic aviation market has seen a high growth rate of 20 percent in the first half of 2010 in comparison with the same period of 2009. Especially, a “hot growth rate” has been seen in the Hanoi, HCM City – Phu Quoc island

Ta Huu Thanh, Deputy General Director of Jetstar Pacific Airlines, maintained that Air Mekong will help the market develop more strongly. The aviation products will be more diversified, which means more choices for passengers.

“We cannot discount Air Mekong. The way the airline accesses the market is remarkable. Meanwhile, we heard that a US investor wants to purchase stakes and help it charter aircrafts and pilots,” a representative of an airline speculated, adding that his airline will have to change its business strategy to adapt to the new circumstances created by Air Mekong.-PL TP HCM

Tags: Vietnam aviation, Vietnam aviation industry, Vietnam aviation market