To upgrade Air Transport Infrastructure

As Vietnam integrates more deeply into the world economy, Vietnamese economic growth has been stable and exuberant. Political stability and social security is a given. This year, however, the entire economy has been rocked by the global economic crisis. Vietnam Economic News' Kieu Nga spoke with Pham Quy Tieu, the general director of the Civil Aviation Administration of Vietnam (CAAV), about how the aviation sector has been affected.
Would you give me a brief overview of the domestic air transportation market in 2009?
Since the beginning of the year international passenger numbers and cargo volume have been falling. In the first nine months of 2009, more than 6.52 million people flew into or out of Vietnam, and that's six percent fewer than in the same time of 2008. Freight is also down with 173,000 tonnes of cargo transported between Vietnam and foreign countries, a drop of 9.4 percent.
But, more people were flying inside Vietnam and more cargo was being shipped by air inside Vietnam. In the first three quarters of 2009, about 6.42 million people took to the skies and 66,500 tonnes of cargo were transported domestically, and that's up 20 percent and two percent respectively compared with 2008. Seat occupancy on some domestic flight routes is high with about 80 percent occupancy on average on flights between Ho Chi Minh City and Hanoi (on just Vietnam Airlines flights it’s 82.4 percent), for HCMC-Da Nang flights it’s 80 percent (Vietnam Airlines 83.5 percent) and for the HCMC-Hue route it’s 91 percent.
Average seat occupancy on domestic flights of all airlines companies is better than 80 percent. For Vietnam Airlines it’s 79 percent, for Jetstar Pacific it’s more than 80 percent, for Vietnam Air Services (VASCO) it’s 83 percent, and Indochina Airlines has been doing 67.5 percent.
Domestic flights account for a substantial part of the income of airlines companies at this period of time. Fortunately, the demand for flights to tourist sites is growing and domestic airlines are quite willing to take people where they want to go.
The air transportation market within Vietnam has been stable for a long time. It appears from some angles that the world economy may be recovering and as it does so passenger numbers and cargo volume will increase. While in the first nine months of 2009 international passenger numbers fell six percent compared to 2008, we are hoping that we'll end the year with a yearly growth of 7-8 percent compared to 2008. In 2009 we expect to transport more than 17 million people between Vietnam and other countries by air.
Has aviation infrastructure been improving adequately here in Vietnam?
A lot has been done in past years to improve air transportation infrastructure. Naturally, we have a plan for air transport infrastructure improvements over the next 10 and 20 years and polices are made with respect to that plan. The 10th National Congress of the Communist Party made a resolution, then the Ministry of Transport made an action plan to implement that resolution and after that all air transportation infrastructure upgrade projects are to follow that action plan. I'm proud to say that every project that has been implemented has been hugely successful and more than 80 percent of State budget funds that were earmarked for aviation sector development have been spent.
A number of things have been done: Dong Hoi Airport opened in July 2008, Tan Son Nhat International Airport got a new terminal in September 2008 and Can Tho Airport was in use in January 2009. Actually, the runway at Can Tho Airport is now being upgraded and a new international passenger terminal is being built. But in addition Da Nang and Lien Khuong airports are being improved and Phu Quoc Airport is being built.
From 2006 to 2008 the number of flights managed by CAAV increased 10 percent annually. The number of incoming and outgoing flights at domestic airports grew 15 percent a year. The number of air passengers and air cargo volume increased 20 percent and 14 percent respectively over those three years. Tax payment also increased 10 percent annually. The entrance of private airlines companies was yet another new development in the Vietnamese air transportation sector.
Following Governmental Decree 30/NQ-CP dated December 11, 2008 which presented solutions to prevent economic decline, maintain economic growth and ensure social security, CAAV provided guidelines under which its affiliates are to make plans for large, new projects. An effort is being made to improve air traffic control management and the skills of those who work in this field.
Domestic airlines companies are implementing modified business strategies and they expect to open new air routes between Hanoi and Can Tho, and between Ho Chi Minh City and Dong Hoi, and they plan to offer low prices to attract customers. As a result of their efforts, the number of people flying within Vietnam keeps increasing. We believe that the 2009 domestic passenger transport target will be realized.
How do you expect the air industry to fare in 2010?
At this time seven airlines are licensed to operate here in Vietnam. These are Vietnam Airlines (VN), Jetstar Pacific Airlines (BL), Indochina Airlines (VP), VASCO, VietJet Air, Mekong Aviation and Trai Thien Air Cargo. Four of these, VN, BL, VP and VASCO, are actually flying between cities in Vietnam and the other three are expected to begin doing so in 2010.
At the end of September 2009, VN, BL, VP and VASCO were using 57 airplanes, 25 of those owned by VN and two owned by other companies.
The global economy is said to be recovering and some are predicting that Vietnamese airlines companies will fly more than 21 million people in 2010. This would mean an average annual grow of more than 15 percent between 2005 and 2010. Another prediction is that of increased air cargo. If, in 2010, 400,000 tonnes of cargo is shipped, the 2005-2010 growth would be more than 10 percent annually. (Actually, a target of more than 20 percent has been set). After 2010, Thai Thien Air Cargo, which expects to begin shipping cargo and foreign airlines companies hope to do a booming business.
Vietnam Airlines (VN) is flying 48 airplanes, all of them B777-200, A330, A321/A320, ATR72-500, and F70 models, and it owns 52 percent of them. Presently, Vietnam Airlines flies 36 international routes and 27 domestic routes.
Jetstar Pacific Airlines (BL) has in its fleet six A320/B737 airplanes. The company flies seven domestic routes: Hanoi-Da Nang, Hanoi-HCMC, HCMC-Da Nang, HCMC-Hue, HCMC-Nha Trang, HCMC-Vinh and HCMC-Hai Phong. In the near future the airlines also expects to fly to Can Tho (Vietnam), Thailand, Singapore and Cambodia.
A subsidiary of Vietnam Airlines, VASCO, is using two ATR72 airplanes (which belong to VN) and flies HCMC-Tuy Hoa, HCMC-Chu Lai, HCMC-Ca Mau and HCMC-Con Dao. VASCO also owns an AN-2 airplane and a King Air B200.
The first private airlines company to operate in Vietnam was Indochina Airlines (VP) flying from HCMC-Hanoi and HCMC-Da Nang starting in November 2008. It is using one B737-800 airplane. In the near future, VP wants to fly the HCMC-Hai Phong route.
VietJet Air, Mekong Aviation and Trai Thien Air Cargo are licensed to transport air cargo but they have not yet done so. They hope to begin operations in 2010.