Private airlines strive to survive

The Ministry of Transport recently submitted a report to the Government on the operation of private airlines.

The Ministry of Transport recently submitted a report to the Government on the operation of private airlines. According to it, most private airlines are struggling to get off the ground. Reporter spoke to Doan Quoc Viet, chairman and CEO of Air Mekong JSC of BIM Group, on the issue.

What are the major reasons for sluggish operation of domestic private airlines?

Except for the Vietnam Airlines, most domestic airlines, including privately owned ones, are offering domestic flights but have yet to launch international routes. Now, international costs are being offset by domestic sales and difficulties of the carriers come from this imbalance.

The costs, including fees for plane purchase and lease, are at international prices. The world gasoline fluctuating but staying continuously high and the constant change of foreign exchange rates are not good for the aviation businesses.

Recently, the State adjusted the ceiling price for airfares on domestic routes, but the adjustment is not really reasonable. For some domestic routes, there is still a big gap between the ceiling price and cost. The ceiling price limits may impact the flexibility in prices of aviation businesses.

What should the private airlines do to overcome these challenges?

Private carriers must take measures to join the aviation market completely. Providing services at the airport is a good way to help the firms reduce costs. They should then improve their quality to better serve customers.

A very important point is that participating in air transport requires the firm to draw up a long-term financial plan for its stable operation and gradual development.

Meanwhile, the State should remove the ceiling price limits on routes exploited by at least two carriers. That will further encourage flexibility in prices as well as promote competition in service quality in an attempt to bring more benefits to customers.

Which prospects for private aviation companies in the domestic market are coming?

Marketing is the most important factor for the development of a business. The aviation market is continuing to develop at a rate of 20 per cent per year, allowing airlines to expand their business and operational scale.

Besides that, the competition of the domestic aviation market and the increasing demands of customers will help the carriers further improve their service quality. This move will bring air transport services of aviation airlines (both private and State-owned) to a higher level. This is also an important foundation for the development of our carriers in the global scale.

Infrastructure for aviation has been improved, enabling enterprises to operate with greater efficiency.

Recently, Air Mekong proposed to the Government it would sell 30-per-cent stake to American Airlines SkyWest? What about its progress?

This proposal will be an important step for us to further develop. The stake selling will come in accordance with Vietnamese laws.

In the times ahead, we will continue to perfect our services and develop more domestic flights. To date, we have launched a series of domestic routes including from Ha Noi to Phu Quoc, HCM City, Da Lat and from HCM City to Phu Quoc, Con Dao and Da Lat.

Air Mekong’s shareholders agreed to increase its capital from current VND285.7 billion (US$13.86 million) to at least VND500 billion ($24.3 million), a level required by law for airlines that want to exploit international routes. If approved by the State, we will soon open the international routes. – VNS

Tags: Private airlines, Vietnam aviation, Vietnam aviation industry, Vietnam aviation market