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Vietnam aviation sector profits increase across the board
Publication Date : 01-10-2013
All six companies in the aviation sector reported profits, said Lai Xuan Thanh, head of the Civil Aviation Authority of Vietnam (CAAV).
Vietnam Airlines Corporation, Vietnam Air Navigation Services Corporation and Airports Corporation of Vietnam have never seen losses and continued to grow this year.
Vietnam's budget private carrier, VietJetAir, also reported 120 billion dong (US$5.7 million) pre-tax profits for the first seven months of the year while Jetstar
Pacific and Vietnam Air Service Company (VASCO) announced profits for the first time.
VietJetAir's executive director Luu Duc Khanh said that making a profit was beyond the company's expectations after only two years of operation. They initially set a modest goal of breaking even within three years.
A representative from VASCO said that the company had a balance of 23 billion dong in the eight-month period and had effectively exploited the domestic routes.
The information surprised experts, given that airline companies faced many difficulties in the past three years with several firms closing.
In February, Air Mekong temporarily ceased operation to restructure; Jetstar also experienced financial difficulties.
Luu Thanh Binh, deputy head of CAAV, expressed optimism about the market, saying that Asia in general and Vietnam in particular had seen double digit growth despite the slowdown in the world market.
Binh predicted that the domestic aviation market would have a growth rate of 15 per cent in terms of passenger transport.
He attributed the strong showing to increasing interest in air travel as well as Vietnam becoming one of the most popular destinations for international tourists.
He said air crew restructuring helped Jetstar Pacific become profitable, while changing from the Boeing 737-400 to A320 model helped the company save 17 per cent of control costs over the same period last year.
However, both experts warned that the increasing popularity of budget carriers posed a significant threat to both economy and high-class market segments that could show an effect by the end of the year.