Vietnam's largest conglomerate Vingroup JSC on Tuesday announced that it is officially withdrawing from the air transport business.
The announcement was made after the assessment of Vinpearl Air’s project was submitted to Prime Minister Nguyen Xuan Phuc for approval by the Ministry of Planning and Investment.
This means Vinpearl Air will not be able to take off. Vingroup did not expand on the future of this aviation project in the announcement, but said it wanted to focus maximum resources on the strategic goal of technology and industry development.
Vingroup said this decision would not affect its pilot training segment undertaken by VinAviation School. The ongoing training course was being maintained with all commitments made to the students.
Vingroup confirmed that it would continue to participate in construction and aviation infrastructure improvement projects nationwide.
The Vinpearl Air dossier said the airline was supposed to be based at Hanoi’s Noi Bai International Airport with total investment of 4.7 trillion dong ($203 million).
It was scheduled to begin operation in July, if approved by the prime minister. The number of aircraft in the first year was six narrow-body planes with 150-220 seats. On average, an additional six aircrafts were due to be put into operation annually. The airline was expected to reach 30 aircraft by 2024.
It was expected that by 2025, Vinpearl Air would operate 62 domestic routes and 93 international routes.
Vingroup deputy chairman and CEO Nguyen Viet Quang said Vietnam’s aviation market had a lot of potential and was developing strongly, but there were also large companies participating in the area.
“Vingroup’s strong investment in aviation can lead to oversupply, causing waste. We also need to focus resources on developing our technology and industry segment, so we decided to withdraw,” Quang said.
In the development strategy announced in 2018, Vingroup aims to become a leading group in technology, industry, trade and service in Vietnam in the next 10 years.
In order to implement this strategy, Vingroup last month withdrew from retail and agriculture (Vinmart, Vinmart + and VinEco). The group later announced the closure of its Vinpro and VienthongA electronics stores to dedicate resources to the manufacturing sector.
The decision to stop investing in aviation was a step in restructuring activities, focusing on the core priorities of the group, Quang said.
Vietnam’s aviation market is considered to be reaching a growth saturation point due to airport infrastructure bottlenecks. The country has five commercial airlines with significant market share, including Vietnam Airlines, Vietjet Air, Bamboo Airways, Jetstar Pacific Airlines and Vietnam Air Services.
VIET NAM NEWS/ASIA NEWS NETWORK