Vietnam's Vietjet Air Takes Off in Public Listing
Vietnam's low-cost carrier Vietjet has soared the maximum 20% in its trading debut in Ho Chi Minh City.
The country's first private airline is thought to soon overtake flag carrier Vietnam Airlines in market share.
Investor interest is driven by the growth pace in the domestic airline market, one of the fastest in Asia.
Vietnam has over the past years been slowly opening up to international investment.
VietJet currently operates about 60 routes both domestically and internationally, and hopes to have a fleet of 200 aircraft by 2023.
The budget airline is another story of a booming Asian low-cost carrier managing to clock exceptional growth in its first years since taking to the sky.
The airline launched its first commercial flights only in December 2011 but, thanks to a rapidly growing middle class, has jumped to become the country's second-largest airline, almost head to head with flag carrier Vietnam Airlines.
Both carriers have about 40% of market share. But if Vietjet's past growth is anything to go by, it is set to claim the top spot in no time.
While most analysts agree that the domestic market will continue to show strong growth, there is caution over whether Vietjet will be able to replicate that success abroad.
"There's no doubt that they are the dominant low-cost carrier in Vietnam," explains aviation analyst Greg Waldron of FlightGlobal. "The question is whether they can really expand that model overseas."
"These business models are not like McDonald's, where you can just replicate the model elsewhere," he explains.
"With airlines, it's a lot more challenging: if they go internationally, this would add a huge amount of complexity to their business model. Long-haul flights would again be a completely different game."
Source : BBC
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