Vietnam’s aviation industry is poised for significant growth, reflecting the country’s ongoing economic development and increasing demand for air travel. As a rapidly emerging market in Southeast Asia, Vietnam has been enhancing its aviation infrastructure, with major investments in airport expansions and upgrades to accommodate the rising number of domestic and international travellers.
The expansion of Vietnam’s aviation industry is closely linked to the growth of its tourism sector, which has seen a remarkable resurgence post-pandemic. With a diverse range of attractions Vietnam is becoming an increasingly popular destination for both leisure and business travellers. Airlines are responding to this demand by expanding routes, improving service quality, and introducing new aircraft to enhance the travel experience. This burgeoning market is expected to benefit from the ongoing recovery in global travel, with forecasts indicating substantial increases in passenger numbers over the coming years.
That said, the industry’s recovery post-pandemic has been turbulent with a number of challenges persisting two years on.
Vietnam’s aviation industry in numbers
Vietnam’s flights market is poised for growth, with revenue anticipated to climb to US$6.38 billion by 2024. This upward trajectory is expected to continue, with an annual growth rate of 6.84 percent, culminating in a projected market value of US$8.88 billion by 2029. Additionally, the user base is set to expand significantly, with an estimated 29.26 million users anticipated by 2029, according to data from Statista.
Domestic flights, Vietnam airlines, 2024
| VA | Vietjet | PA | Vasco | BA | VT | Total | |
| January | 8,941 | 9,109 | 839 | 320 | 1,796 | 409 | 21,414 |
| February | 10,383 | 9,639 | 1,496 | 506 | 2,089 | 598 | 24,711 |
| March | 8,963 | 8,388 | 219 | 638 | 1,764 | 508 | 20,480 |
| April | 8,468 | 9,617 | 5 | 743 | 1,081 | 517 | 20,431 |
| May | 8,396 | 9,076 | 2 | 737 | 1,214 | 612 | 20,037 |
| June | 9,875 | 10,134 | 32 | 689 | 1,174 | 555 | 22,459 |
| July | 11,066 | 10,551 | 339 | 709 | 1,423 | 661 | 24,749 |
| August | 9,916 | 8,964 | 441 | 655 | 1,452 | 603 | 22,031 |
| September | 7,544 | 7,848 | 346 | 464 | 1,071 | 447 | 17,720 |
| October | 7,483 | 7,965 | 366 | 489 | 1,150 | 394 | 17,847 |
| Total | 83,552 | 83,326 | 3,719 | 5,461 | 13,064 | 4,910 | 194,032 |
Source: Civil Aviation Authority of Vietnam
VA= Vietnam Airlines, PA = Pacific Airlines, BA = Bamboo Airways, VT = VietTravel
Key players in Vietnam’s aviation industry
These players collectively contribute to the dynamic growth of Vietnam’s aviation industry.
Vietnam Airlines
As the national flag carrier, Vietnam Airlines operates a wide range of domestic and international routes, connecting Vietnam with major global destinations. Known for its commitment to quality service, the airline is a member of the SkyTeam alliance and has won several awards for its service and safety.
VietJet Air
Founded in 2007, VietJet has rapidly established itself as one of the largest low-cost carriers in Vietnam. The airline is known for its innovative marketing strategies and promotional fares, appealing to budget-conscious travellers. VietJet operates both domestic and international flights, expanding its network aggressively. It is currently listed on the Ho Chi Minh City Stock Exchange under the ticker VJC.
Box 1: UK court finds against Vietnam’s Vietjet in leasing dispute from 2021
In July of 2024, a court in the UK found that FitzWalter Aviation Holdings, which had a leasing agreement with Vietnam’s Vietjet, had the right to cancel said lease back in 2021. Vietjet had argued that the lease termination was illegal and had refused to allow four aircraft to be repossessed. The judgement will see FitzWalter take possession of the aircraft and attempt to recover US$180 million owed by Vietjet.
See also: The VietJet UK Court Ruling for Foreign Firms in Vietnam: Unpacked
Bamboo Airways
Launched in 2019, Bamboo Airways aims to provide a mix of low-cost and premium services. The airline focuses on enhancing the passenger experience and has quickly grown its domestic and international routes, establishing itself as a strong competitor in the market.
Pacific Airlines
Formerly known as Jetstar Pacific, Pacific Airlines is a subsidiary of Vietnam Airlines that operates as a low-cost carrier. The airline offers affordable flights primarily on domestic routes and is known for its straightforward service model.
Vasco (Vietnam Air Services Company)
Vasco specialises in regional flights and is also a subsidiary of Vietnam Airlines. It focuses on connecting smaller airports to larger hubs, catering to passengers in underserved areas of Vietnam.
Airports Corporation of Vietnam (ACV)
This state-owned enterprise manages and operates many of the country’s airports. ACV is responsible for the development and maintenance of airport infrastructure, ensuring that facilities meet the growing demands of air travel.
Vietnam Air Traffic Management Corporation (VATM)
VATM oversees air traffic control and management in Vietnam, ensuring the safety and efficiency of air travel in the country’s airspace. It plays a vital role in coordinating flights and managing air traffic flow.
Foreign ownership limits in Vietnam’s aviation industry
Vietnam’s aviation industry is restricted for foreign firms. Foreign ownership limits are applied to several key areas. These include:
Air navigation services
Per Decree 89/2019/ND-CP foreign firms or individuals can own no more than 30 percent of a business providing air navigation services–air traffic control businesses for example. These businesses must also be at least 65 percent state-owned.
Airlines and air transport
Foreign firms are limited to no more than 34 percent ownership of an airline in Vietnam. This is specified in Decree 92/2016/ND- CP which was amended by Decree 89/2019/ND-CP. Furthermore:
- Only a Vietnamese individual or Vietnamese legal entity can be the majority shareholder;
- Foreign ownership in Vietnamese legal entities that are majority shareholders is capped at 49 percent; and
- Two-thirds of a company’s executive-level positions must be occupied by Vietnamese citizens.
Airports and airport businesses
Foreign investors in airports or airport businesses can only do so through a joint venture in which they cannot own more than 30 percent share of the company. This is detailed in Decree 89/2019/ND-CP.
Box 2: Proposal to increase foreign ownership limits in airlines in Vietnam rejected
A proposal from Bamboo Airways to increase the foreign ownership limit in airlines in Vietnam to 49 percent from 34 percent was rejected by the Ministry of Planning and Investment in June of 2024. The ministry had denied the request on the grounds that there was “no legal basis to consider Bamboo Airways’ proposal”, though it’s not clear exactly what that means.
For its part, Bamboo Airways had argued that the current 34 percent limit does not provide foreign investors with enough voting rights and this makes investing in airlines in Vietnam too risky.
Consumer behaviour in Vietnam’s aviation industry
Consumer behaviour in Vietnam’s aviation industry reflects a rapidly evolving market influenced by various factors:
Increasing demand for air travel
Rising incomes and a growing middle class have led to greater demand for air travel, with consumers seeking convenient and affordable options for both domestic and international trips.
Preference for low-cost carriers
Many travellers are opting for low-cost airlines like VietJet Air due to their competitive pricing and promotional offers. This trend is particularly strong among younger travellers and budget-conscious individuals.
Focus on service quality
While price is a significant factor, consumers are increasingly prioritising service quality. Factors such as punctuality, in-flight amenities, and customer service play an essential role in their decision-making.
Influence of online booking
The rise of digital technology has transformed how consumers book flights. Many prefer online platforms and mobile apps for their convenience, leading to a decline in traditional travel agency usage.
Travel experience and preferences
Travellers are seeking unique travel experiences, often influenced by social media and online reviews. This has led to an increased interest in destinations and airlines that offer distinctive services or experiences.
Environmental concerns
With growing awareness of environmental issues, some consumers are becoming more conscious of the carbon footprint associated with air travel. This trend may influence their choice of airlines and travel practices.
Overall, consumer behaviour in Vietnam’s aviation industry is marked by a blend of price sensitivity, a desire for quality service, and an increasing reliance on technology for travel planning and booking.
Box 3: New terminal for Hanoi airport underway
A second terminal for Vietnam’s Noi Bai International Airport in Hanoi is underway with a groundbreaking ceremony back in May. The project is estimated to cost VND 5 trillion or US$196.5 million, will cover 6 hectares, and is scheduled to be completed by the end of 2025.
For context, at the end of last year, the President of Vietnam Airlines noted that overcrowding at Vietnam’s airports was costing the national carrier US$20 million a year. Notably, Hanoi’s Noi Bai International Airport was built for 25 million visitors a year but was expected to finish 2023 with 30 million arrivals.
What’s next?
Vietnam’s aviation industry has grown quickly, driven by a rising middle class and increasing demand for both domestic and international travel. Key players, including national carriers and low-cost airlines, are competing to offer diverse services while maintaining affordability. That said, the industry has not yet fully recovered from COVID border closures and it still may have some way to go yet.
With this in mind, to keep abreast of what’s happening in Vietnam’s aviation industry, foreign aviation industry professionals should make sure to subscribe to the-shiv.