22:36 (GMT +7) - Friday 16/11/2018

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Vietjet's market cap second highest in region

Released at: 18:19, 08/11/2018

Vietjet's market cap second highest in region

Photo: Vietjet

Airline the second-most valuable of Southeast Asian carriers, according to Nikkei Asia.

by Doanh Doanh

Vietjet Air, Vietnam’s largest budget carrier, has grown into the second-most valuable airline in Southeast Asia by market capitalization, according to the latest report from Nikkei Asia. The airline is now building on that success to create a network of international routes stretching outside the region.

CEO Ms. Nguyen Thi Phuong Thao told Nikkei in an interview that the airline seeks to capture surging domestic demand for business and leisure travel to Japan. The budget carrier’s fares will be low, with round-trip tickets from Hanoi to Kansai Airport, near Osaka, costing roughly $300.

Vietjet began services between Hanoi and Kansai Airport on November 8. Flights between Ho Chi Minh City and Kansai will follow in December, as will flights tying Hanoi and Narita Airport near Tokyo. Routes to Haneda Airport, Chubu Airport near Nagoya, and the airport serving Fukuoka are also in the works.

Vietjet currently offers flights to destinations in nine countries and territories, including China, Thailand and Malaysia. It will soon make a decision on whether to launch more international routes, to India, Russia and Australia, and is also considering partnerships with European carriers.

Last year, Vietjet overtook Vietnam Airlines to take the lead in domestic traffic and now looks to take that momentum overseas, armed with extra financial resources.

Vietjet’s strengths lie in its focus on cutting costs. Despite being no-frills, it has top-of-the-line aircraft with superior fuel mileage. Vietjet’s average cost per seat, not including fuel, adds up to just 2.25 cents per kilometer, which is reportedly the lowest among global airlines. Its net profit margin is around 11 per cent, exceeding that of elite carrier Singapore Airlines.

It aims to set itself apart with its amenities. In-flight meals - which cost extra - feature menu items not usually offered by low-cost carriers. Thanks to such unique services, annual sales have shot up 160 per cent over three years.

Vietjet has attracted stock market investors as well. The company’s market capitalization has surpassed that of AirAsia, the Malaysian carrier that is Asia’s largest budget airline. Only Singapore Airlines has a bigger market value than Vietjet among Southeast Asian carriers, according to Nikkei Asia.

Vietjet operates 60 A320 and A321 aircraft on more than 385 flights daily, carrying more than 60 million passengers to date on 94 routes covering destinations in Vietnam as well as internationally such as Hong Kong, Singapore, South Korea, Taiwan (China), China, Thailand, Indonesia, Myanmar, Malaysia, Cambodia, and elsewhere.

It plans to expand its network across the Asia-Pacific region and is continuing to expand its regional network. It has recently signed contracts to purchase new aircraft from the world’s leading aircraft manufacturers.

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