New airline setup to be considered after 2022

The establishment of new airlines in Vietnam will be considered after 2022 when the local aviation market is expected to fully recover following the Covid-19 pandemic.

Deputy Prime Minister Trinh Dinh Dung has issued instructions on the new airline setup following the Ministry of Transport’s proposal.

According to the ministry, the government needs to focus on improving the post-Covid-19 aviation market and helping to ease difficulties for airlines. Meanwhile, the establishment of new airlines should be delayed after 2022 when the market should have bounced back.

The Ministry of Planning and Investment submitted the KiteAir project invested by Thien Minh Aviation JS Company to Prime Minister Nguyen Xuan Phuc for consideration. The project, which has a total investment of VND5.5 trillion (USD239.13 million), will be operated as a low-cost carrier to mostly link the central to south-central and southern regions.

In April, the prime minister asked the Ministry of Transport to consider the new airline setup amid the Covid-19 pandemic.

The Ministry of Transport reported that the Vietnamese aviation market posted an annual growth of 20.5% in passenger number and 13.2% in goods transportation during the 2014-2018 period.

However, the Covid-19 pandemic has severely hit the market. This year, passenger transportation by air in Vietnam would reach 42.7 million, down 46% on-year and accounting for just half of the figure forecasted.

By 2022, the Vietnamese aviation market is expected to transport 78 million passengers in total, down 26% of the planned figure, including 57 million to be served by Vietnam’s airlines.

Vietnam’s carriers currently have a total 214 airplanes which are mostly being used for domestic air routes.

National flag carrier Vietnam Airlines has been forecasted to suffer losses of VND13 trillion (USD565.21 million) this year. The figure is VND2.2 trillion down from the previous figure of VND15 trillion forecasted earlier.