Customers queue for check-in at Nội Bài International Airport. — VNA/VNS Photo

HÀ NỘI — Việt Nam’s aviation industry is experiencing a recovery and promising growth opportunities, boosted by falling fuel prices and surging travel demands.

The easing of jet fuel prices has emerged as a pivotal factor in reducing operational costs for airlines.

According to the Việt Nam International Securities Corporation (VISE), the downward trend in Brent crude oil and Jet-A1 fuel prices, which peaked in 2022, has significantly eased the financial pressures on airlines.

This decline not only allows competitive ticket pricing but also stimulates tourism and air freight demand, forming the foundation for long-term growth.

Industry analysts predict a robust increase in travel and cargo volumes, particularly during the Lunar New Year of 2025. The Civil Aviation Authority of Việt Nam forecasts that the aviation market will handle 78.3 million passengers and 1.21 million tons of cargo in 2024, reflecting year-on-year growth of 7.7 per cent and 13.4 per cent, respectively.

The International Air Transport Association (IATA) also anticipates a full recovery of the global aviation market by the end of 2024.

Vietnamese airlines are proactively gearing up, expanding their fleets and launching early ticket sales for the Lunar New Year to cater to rising demand. Night flight frequencies are also being increased, offering passengers competitive pricing and enhanced travel options.

Policy changes

An impactful regulatory change took effect on March 1. The Ministry of Transport's Circular No. 34/2023/TT-BGTVT, amending Circular No. 17/2019, revises domestic air passenger service pricing frameworks.

This adjustment enables airlines to offset escalating fuel and exchange rate costs seen over the past decade.

Vietravel Airlines highlights that the raised price ceiling maintains high customer satisfaction while ensuring sustainable operations. A wider fare range allows airlines to balance direct and indirect costs effectively, securing long-term business viability.

Despite the favourable outlook, the sector grapples with infrastructural bottlenecks.

Major airports like Nội Bài, Đà Nẵng and Tân Sơn Nhất operate beyond their designed capacities. Tân Sơn Nhất International Airport, for instance, handles 41.6 million passengers annually against its intended capacity of 28 - 30 million.

To tackle this, the Government is expediting infrastructure upgrades.

The Tân Sơn Nhất Terminal 3 project, a nearly VNĐ11 trillion (US$432.2 million) investment, is set to open by April 30, 2025, and will cater to 20 million domestic passengers annually.

Upon completion, the airport's total capacity will increase to 50 million passengers per year. Supporting road projects, including the Trần Quốc Hoàn - Cộng Hòa connector and Hoàng Hoa Thám expansion, are underway to ensure seamless access.

Additionally, the Long Thành International Airport, designed to accommodate 100 million passengers annually across three phases, is poised to become Việt Nam’s largest airport, further alleviating capacity constraints.

Vietnamese aircrafts land at the Nội Bài International Airport. — VNA/VNS Photo

Fleet expansion

Vietnamese airlines are making strategic investments to scale up operations.

Vietnam Airlines plans to bolster its fleet with four leased Airbus A320/A321 aircraft to meet Lunar New Year demand. Similarly, Vietjet continues its aggressive fleet expansion, having secured a $7.4 billion deal with Airbus in July to acquire 20 wide-body A330neo aircraft.

In October, Vietjet welcomed three new environmentally friendly aircraft, with more expected in the last quarter (Q4) of the year.

The favourable business environment has translated into impressive financial performances.

Vietjet's Q3 profit after tax reached VNĐ572 billion, tripling year-on-year and marking the highest since Q4 2020. Its consolidated nine-month profit after tax soared by 564 per cent year-on-year to over VNĐ1.4 trillion.

Vietnam Airlines also reported a strong Q3, with revenue climbing nearly 13 per cent over last year to VNĐ26.83 trillion and a consolidated profit after tax of VNĐ862 billion, reversing a VNĐ2.1 billion loss from the same period last year.

SCSC Cargo Service Corporation demonstrated a remarkable recovery in the air freight sector. Q3 revenue rose 55 per cent year-on-year to VNĐ266 billion, while profit after tax grew 46 per cent to VNĐ186 billion.

Notably, international cargo volumes increased by 51 per cent, while domestic volumes registered a steady 16 per cent growth. — VNS