How will Bamboo Airways break into Vietnam’s duopoly?
A booming economy coupled with growth of international tourism has helped Vietnam become one of the fastest growing aviation markets in the world. As per IATA, Vietnam is ranked as the fifth fastest growing aviation market globally and is expected to witness an annual growth rate of 7.2% in terms of additional passengers per year from 2014-2034.
Bamboo Airways is the most recent entrant to this market having started operations in early 2019. The airline has attracted headlines through its aggressive start-up plans - it has 10 Boeing 787s and 50 (including options) Airbus A321neos on order. Although it currently flies only domestically in Vietnam, the carrier is also targeting long-haul routes to Europe and the US very soon.
However, the carrier will first need to make an impact domestically in Vietnam’s highly concentrated market. The country’s aviation sector is currently dominated by well-established and fairly successful incumbents – Vietnam Airlines (and its subsidiaries) and VietJet. The former is a state-owned airline and the latter is one of the rising stars of the region. The two airline groups more or less control the entirety of Vietnam’s domestic market. Breaking into their duopoly will be one of Bamboo’s biggest challenges.
The Ishka View
Despite the challenges, Bamboo Airways is one of the most interesting startups to emerge from Asia Pacific in recent years. It comes across as an airline with a well-thought of business plan with a reasonable market positioning strategy that should help it to differentiate against competition. It is part of a large Vietnamese conglomerate that sees Bamboo as a strategically important unit for its next phase of growth. And most importantly, Bamboo operates in a market with huge potential and one that is geared for rapid expansion in the coming decade.
The following is an excerpt from the airline credit profile on Bamboo. Please email: team@ishkaglobal.com to receive your complimentary Bamboo Airways Airline Credit Profile in full.
Ishka’s Airline Credit Profile service delivers essential intelligence for lessors, asset managers, investors and suppliers to assess airlines, benchmark ABS deals and for airlines to conduct powerful competitive analysis. For more information please contact Chris Keene: chris@ishkaglobal.com or +44 (0) 20 3176 6392.
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