Bamboo Airways brings forward launch as it aims to satisfy growing appetite for international air travel in Vietnam, but could overcapacity be a real threat?
Vietnamese start-up Bamboo Airways has taken delivery of its first aircraft and adjusted its planned launch date as it aims to take advantage of the growing demand for air travel in and out of the country. The Airbus A319 has been acquired from an Irish lessor and will be used to launch flights from 27-Dec-2018, two days earlier than originally intended. An A320 will follow in the next couple of weeks to support its scheduled international operations that will initially link Vietnam to destinations in Japan and South Korea, according to its parent company FLC Group.
Vietnam’s international aviation market has grown at a phenomenal rate in the past three years, driven by a surging tourism industry. Vietnam is on pace to have 38 million international passengers and 16 million visitors in 2018, compared to only 18 million passengers and eight million visitors in 2015. Not surprisingly, the rapid growth has captured the attention of both local and foreign airlines.
It is this growth that has compelled the Vietnamese real estate company FLC Group to establish Bamboo Airways, a hybrid airline that will have a focus on the international market. Bamboo is expected to initially operate some domestic services, followed by regional international services in 2019 and long haul services in 2020 using newly ordered Boeing 787 Dreamliners.
It seems positive, but there is a risk that Vietnam’s international market will have slowed by the time Bamboo reaches critical mass. It is not realistic to assume Vietnam’s international market will continue to grow at a 20%-plus per annum rate. Infrastructure constraints are a concern – both with airports and tourism infrastructure. Even with annual visitor number growth slowing to 10% there is a likelihood of overcapacity, given the ambitious expansion plan of Vietnamese airlines. Overambitious start-ups could ultimately drive it over the edge.