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Airlines’ 'premature deaths' in Vietnam

Airlines’ 'premature deaths' in Vietnam

Wednesday 15, 01 2020
Vingroup's Vinpearl Air is the latest name to stop the game in the field of air transport. Before that, AirAsia, Trai Thien or Blue Sky Air had not yet been able to fly into the sky of Vietnam. Indochina Airlines and Air Mekong had also disappeared from the aviation industry map after a short time of operation.

Vingroup Corporation has just announced the termination of the Vinpearl Air project after sending a written request to the Ministry of Transport for withdrawal from the air transport business. Vingroup's withdrawal took place 2 weeks after the project was submitted to the Government.

Vingroup leaders said the aviation market is still potential but many large companies are participating. The strong investment in aviation can lead to oversupply, causing waste to society.

Vingroup leaders said

According to the initial plan of the Vinpearl Air project with 6 aircraft in the first year, an average of 6 aircraft will be put into operation each year, reaching 30 aircraft by 2024. It was expected that Vinpearl Air will officially put into operation, exploit commercial flights in July 2020.

​Vietnam aviation market currently has 6 domestic airlines including Vietjet, Vietnam Airlines, Bamboo Airways, Jetstar Pacific, Vasco and Vietstar Airlines. Besides, some other units also want to set foot in this field such as Kite Air (Kite Air) or Vietravel Airlines.

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In addition, Vingroup needs to focus on resources for technology - industry development. The fact also once again shows that this is a field of "cocoon" players and financial potential can not be a guarantee for success. The "indefinite delay" of the brand in the past has repeatedly proved this fact.

4 failures of AirAsia in Vietnam

AirAsia is Asia's leading low-cost airline and has successfully penetrated into many markets such as Thailand, Indonesia, and India. However, AirAsia has failed four times in its attempt to bring the brand into Vietnam.

The first step of this Malaysian Airlines into Vietnam began in about 2005 when it wanted to take part in restructuring Pacific Airlines. into Vietnam began in about 2005 when it wanted to take part in restructuring Pacific Airlines.

The battle for the state-owned airline ended with Qantas of Australia as the winner, resulting in the airline being renamed Jetstar Pacific as it is today. In 2007, AirAsia continued trying to establish a joint venture with Vietnam Shipbuilding Industry Corporation (Vinashin). However, the dream of this giant was broken because the Government at that time did not advocate licensing of establishing new airlines, especially to foreign-invested firms.

For the third time, AirAsia raised the issue of a joint venture with another low-cost airline Vietjet Air in 2010. However, like previous unsuccessful efforts, the two sides could not cooperate with each other due to the opposition from Vietnam Airlines.

The giant's latest effort was a joint venture with Thien Minh and Hai Au in 2017. However, the parties released the contract in April 2019. CEO Tony Fernandes later said the company no longer had any plans in Vietnam.

The leader of AirAsia also informed that the airline is seriously considering setting up a branch in Cambodia, followed by China and Myanmar.

Trai Thien and Blue Sky Air also "died prematurely".

Trai Thien Air Cargo was the first private airline in Vietnam to be licensed to transport goods and parcels but suffered from "premature death" before it could fly in the sky.

Established in June 2008, Trai Thien was granted a business license to transport goods by domestic airway since October 2009 with a capital of VND 500 billion. After a year of licensing, the airline has not yet announced plans to buy aircraft, schedule flights.

By the end of 2011, the Aviation Department withdrew the business license of Trai Thien, because the airline did not have any signs of the ability to take off.

Another company licensed to operate in August 2010 is Blue Sky Airlines. The airline plans to operate helicopters, seaplanes and all other wing aircraft, operating more than 20 domestic travel routes.

However, since the launch, the company with the English name Blue Sky Air has had no more information about the operation situation.

Indochina Airlines and Air Mekong got out of the game

Indochina Airlines was established in May 2008 with the original name of Accelerator Aviation Joint Stock Company, with a charter capital of VND 200 billion. In October 2018, the airline of musician Ha Dung was renamed Indochina Airlines.

Indochina Airlines made the first flight on November 25, 2008, with a fleet of 2 chartered Boeing 737s and domestic flights only.

But a year later, the private company was in trouble due to the impact of the economic downturn, which made the demand for air travel sharply reduced. By September 2009, the airline was only able to hold a flight of Ho Chi Minh City - Hanoi.

In 2011, the crisis at Indochina Airlines was exacerbated by debt owing to partners' petrol, staff salaries and the need to stop taking off. From here, this private firm gradually disappeared in the sky of Vietnam when the Aviation Administration of Vietnam withdrew its license due to inactivity.

The company "red-headed crane" got out of the game after more than 2 years.

Private airline Mekong also soon stopped flying after more than 2 years of launch. The company "red-headed crane" was established with a charter capital of VND 200 billion by many Vietnamese investors, represented by Ha Long Investment and Production Development Company (BIM Group).

The airline was granted a business license in October 2008 and first flew in October 2010. After more than 2 years of presence, Air Mekong has 4 commercial aircraft Bombardier CRJ 900 with 13 domestic routes.

Air Mekong leaders once acknowledged that the difficult economic situation led to inefficient operation. By mid-2012, Eximbank wants to invest in strategic purchase of 11% of the capital; however, the contract between Air Mekong and Eximbank was broken afterward.

At the end of 2012, CEO Luong Hoai Nam resigned and in February 2013, the airline officially stopped flying and paid 4 aircraft to partners. The Ministry of Transport has "killed" Air Mekong from Vietnam's aviation market in early 2014.

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