Vietnam Airlines 2017 outlook: slower growth and smaller profits as competition intensifies

Vietnam Airlines has grown rapidly and profitably over the last two years, despite intensifying from its fast-growing local rival VietJet Air. Vietnam Airlines is now only one of four airlines in Southeast Asia with more than 20 million annual passengers.

Passenger traffic has grown by more than 50% since VietJet’s launch at the end of 2011, while the flag carrier has accumulated approximately USD150 million in pre-tax profits. In 2016 Vietnam Airlines achieved 19% growth and record profitability.

However Vietnam Airlines plans to grow at a much slower rate in 2017, and intensifying competition will likely impact profitability. Opportunities for further domestic expansion are becoming more limited as the market becomes more saturated, while international expansion poses more challenges and risks.