Vietnam Government responded to Vietnam Airlines' requests for the government not to endorse AirAsia’s plans to launch a JV airline in the country, stating all civil aviation cooperation with foreign partners requires approval from the Prime Minister (VietNamNet, 17-Mar-201). Vietnam Airlines claimed the JV would allow AirAsia to join VietJet AirAsia’s Board of Directors, allowing it to manage the carrier. The carrier also stated the entry of a number of foreign LCCs would adversely affect new local carriers. Civil Aviation Administration of Vietnam (CAAV) has stated that AirAsia only has a share in VietJet AirAsia, and that there are no plans between VietJet AirAsia and AirAsia to launch a new carrier. VietJet Air confirmed the CAAV’s comments.
Vietnam Government supports AirAsia:only has VietJet AirAsia stake, will not operate the carrier
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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.
Turbulence will hurt Southeast Asia’s airlines in 2017 as overcapacity bites
Southeast Asia is a region with enormous growth potential but a relatively cloudy outlook for airlines given the intense competition and overcapacity concerns.
Demand is on the rise, boosted by a growing middle class, rising discretionary incomes and relatively strong economies. Nearly every country in Southeast Asia continues to post GDP growth above the global average. The Philippines, Vietnam, Myanmar and Cambodia have been particularly strong with GDP growth in the high single digits.
However, GDP growth slowed to less than 5% in the rest of Southeast Asia in 2016 and is expected to only pick up slightly in 2017. In several Southeast Asian markets, capacity has been growing faster than demand, impacting yields as competition has intensified. With an order book that equals the size of the current active fleet and several airlines pursuing strategic expansion, capacity may again be added at a rate exceeding demand in 2017.