Much Room for Budget Airlines

11:23:49 AM | 7/25/2019

In a recent working meeting with Mr. Eddy Krismeidi Soemawilaga, Director of Affairs and Policy at Air Asia in Hanoi, Mr. Nguyen Quang Vinh, Secretary General of the Vietnam Chamber of Commerce and Industry (VCCI), highly appreciated the strong development and particularly the competitive price of budget airline brand AirAsia (Malaysia) and expressed his confidence that AirAsia has vast room for growth in Vietnam.

Mr. Eddy Krismeidi Soemawilaga also saw the future potential and strengths of the aviation industry of Vietnam - a country with 96.2 million people. This promises to be a potential market of high demand for air travel in the future. And, they are also key likely customers that Air Asia targets in Southeast Asia.

He said, AirAsia leaders also noticed that, over the past decade, the Asian aviation industry has witnessed a massive boom. A survey by IHS research firm showed that there are now more than 230 Asian airlines in the industry making up 27% of the world’s commercial aircraft fleet, nearly 28% of international and 40% of domestic air passenger traffic. In addition, the growth of budget airlines and the expansion of the middle class have made passenger traffic grow rapidly in Asia. The IHS report showed that domestic and international airway passengers in Asia increased by 10.5% and 8.2% in 2015, respectively. Besides, IHS forecast Asian airline sales will rise by 9.2% a year in 2016-2020.

Air Asia is a budget airline based in Kuala Lumpur, Malaysia. Currently, the airline sells Air Asia tickets on domestic and international flights to more than 100 locations in 22 countries around the world.

Vietnam is considered the fifth largest aviation market in the region and has a passenger growth of 28%, three times higher than many other countries. Its domestic passenger traffic doubled in 2013. The middle class also accounts for a quarter of the population. Therefore, Vietnam is a destination of Air Asia's investment. Before that, the airline also invested in many regional markets such as Indonesia, Thailand, India and Japan.

Mr. Nguyen Quang Vinh said that the Government of Vietnam encourages not only national carriers and private airlines, but also foreign investors, to join the Vietnamese aviation market. For the time being, Vietnam has five operational airlines, including Vietnam Airlines, Vietjet Air, Jetstar Pacific, VASCO and Bamboo Airways. And, if Air Asia enters a joint venture with a Vietnamese airline to tap this market, it will be good for Vietnamese people to enjoy the super cheap prices offered by Air Asia.

Acting as a bridge for foreign investors to do business in various market segments, VCCI will support Air Asia to expand the market and seek partners, helping the Vietnamese aviation market take off further, grow higher and develop more sustainably with the Air Asia model in the future, he said.

Anh Phuong