Da Nang Airport

VietJet overtakes Jetstar Pacific as largest Vietnamese low-cost carrier

VietJet Air has announced a major network expansion that will make it Vietnam’s largest low-cost carrier, overtaking Jetstar Pacific, by the end of 2012. VietJet is also poised to beat rival Jetstar Pacific in becoming the first Vietnamese LCC to operate international services. VietJet, which will expand its domestic network from five to nine destinations in Nov/Dec-2012, is looking at launching its first international route – possibly Ho Chi Minh-Bangkok – in late 2012 or early 2013.

Jetstar Pacific has been focusing this year on fleet renewal rather than expansion but is planning to resume expansion in 2013, ending a hiatus of four years in which growth was paused due partially to internal uncertainty. The carrier began a more promising new chapter earlier this year after a 70% stake was transferred to Vietnam Airlines, which previously had been looking at launching its own LCC subsidiary (Jetstar owns the remaining 30% stake in Jetstar Pacific). But Jetstar Pacific may struggle to keep up with much newer VietJet, which is likely to continue expanding at a faster pace than Jetstar Pacific.

New LCC VietJet closing in on double-digit market share in fast growing Vietnamese domestic market

VietJet Air, an LCC that launched operations in Vietnam in Dec-2011, is expanding its schedule and in May-2012 will capture an estimated 9% of the domestic market. The growth honeymoon however will soon slow down and become competitive as Jetstar Pacific, now the LCC of Vietnam Airlines, plans to expand its fleet later this year. Jetstar Pacific currently only operates five Boeing 737-400s and two Airbus A320s but will expand to an all-A320 fleet of 15 within a "few" years, possibly placing it on par with the 15 aircraft VietJet plans to have by the end of 2014.

VietJet will use some of its A320s on international routes, possibly starting late this year, but aims to capture about 20% of the domestic Vietnamese market. VietJet currently has a fleet of three A320s although its current schedule – three roundtrips between Hanoi and Ho Chi Minh – could easily be operated with just one aircraft. VietJet's additional routes will fully or nearly fully utilise its current available capacity, allowing it to increase its market share from 3% to 9%.

Vietnam’s LCC market poised for explosive growth as VietJet AirAsia launches and Jetstar expands

The Vietnamese aviation market is poised for significant low-cost carrier growth as a new AirAsia affiliate launches services at the end of this year and the country’s first LCC, Jetstar Pacific, plans to finally implement long-delayed expansion plans. Meanwhile flag carrier Vietnam Airlines is preparing to launch its own LCC subsidiary or unit by 2014. Three LCCs may seem like too many for a market which last year consisted of only about 20 million passengers, but is reasonable when considering the rapid economic growth in the country and the small size of its LCC sector compared to other ASEAN countries.