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Tran Trong Kien still insists on establishing KiteAir Airline despite disadvantages

Tran Trong Kien still insists on establishing KiteAir Airline despite disadvantages

Wednesday 15, 01 2020
The accumulated losses until the end of 2018 was 139 billion VND. However, the positive point is that the revenue of the airline is increasing, and the amount of losses is decreasing. In 2018, Hai Au only noted a losses of 4.4 billion VND, which was so much lower than the figure from the previous year.

Recently, the Thien Minh Airline Joint Stock Company has submitted application to the Quang Nam Province’s Department of Planning and Investment asking for the issuance of the establishment of the KiteAir Airline project with the charter capital of 1000 billion VND. 

According to the plan, Thien Minh suggests investing into a total of 30 planes by 2024, 15 of which are ATR72 and the remaining planes are A320/A321. 

Thien Minh or its director Tran Trong Kien is a familiar name in the tourism field, especially in the aviation industry. 

Prior to submitting the application for the establishment of KitAir airline, Thien Minh Corporation (the parent company of Thien Minh Airline) used to plan to cooperate with AirAsia in establishing a no-frills airline in Vietnam, but this plan fell through in April 2019 since the two parties couldn’t reach an agreement. 

Another well-known investment of Tran Trong Kien in the aviation sector is the repurchasing of the Hai Au Airline in 2013. 

Hai Au Airline is different from other airlines in the market since its field of choice is proving customers with short-haul flights or scenic flights to famous locations in Vietnam, including Halong Bay, Da Nang, or Hue on seaplane. This is also the only current Vietnamese Airline providing this kind of service. 

Hai Au Airlines had 3 Cessna Grand Caravan 208B – EX seaplanes, and the first flight of the brand commenced in September 2014. 

At that time, Mr. Luong Hoai Nam, an experienced person in aviation management since he was a senior manager at Vietnam Airlines and Air Mekong, was asked to become the Director of Hai Au Airline. 

Even though Hai Au Airline provides a unique service in Vietnam, Hai Au's business activities in recent years have not been really effective and often in a state of excess capacity, while still having to pay labor costs and depreciation.

In 2015, Hai Au recorded a revenue of only VND 17.3 billion but a loss of VND 57.4 billion, thereby dragging accumulated losses after the first 2 years of operation to VND 81.3 billion. Also in 2015, Mr. Luong Hoai Nam left Hai Au to join Vietstar Airlines.

Sharing about difficulties in the business process, the leader of Hai Au airport said that most of the needs of Hai Au Aviation was to fly outside of the air routes. However, the airline is often "forced" to follow the air routes. When the air routes were "closed" (for example, the air routes from Hanoi to Hai Phong), Hai Au Aviation was forced to fly around other air routes with much time and cost.

However, in recent years, Hai Au's business activities are gradually having positive changes as revenue has grown steadily over the years, while the losses are declining.

According to the data, in 2018, Hai Au Aviation recorded a revenue of 66 billion dong, up 18% from the previous year and nearly 4 times higher than 2015.

Meanwhile, the loss in 2018 was only 4.4 billion, down sharply from the loss of 19.2 billion in the previous year. However, the accumulated losses of Hai Au as of the end of 2018 are still up to 139 billion dong as a result of the first years of operation.

>>> Airlines’ 'premature deaths' in Vietnam

Source: Quang Nam Province’s Department of Planning and Investment 

Categories
Business

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