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Analyst Pin-board: Update On The Aviation Industry

In 2019, Vietnam's aviation industry continued to experience a healthy double-digit growth amid issues at some key airports. Overall air traffic volume was up 12% YoY and reached approximately 116 mn pax. Although the growth rate of international passenger traffic continued to outpace domestic passenger growth, the gap between the two has contracted. Domestic passenger volume growth rate was estimated at 11% YoY, picking up strongly from 6% YoY in 2018. We believe this was likely driven by new supply from brand-new carrier Bamboo Airways, following years of not prioritizing the domestic market by incumbents (VJC, HVN, and Jetstar Pacific). On the contrary, international passenger volume’s growth rate showed a moderate deceleration, up 14% YoY in 2019 vs 21% YoY in 2018. Though this growth rate was in line with the foreign inbound tourist arrivals by air of 15% YoY for 2019, we attribute this slowdown to the estimated sluggish int’l pax volume rise of only 5% YoY at Tan Son Nhat Airport (SGN), which accounts for over 40% of Vietnam’s int’l air passengers. Its runways and passenger terminals are experiencing serious overload issues. In the meantime, other major terminals such as Noi Bai (HAN), Cam Ranh (CXR) and Da Nang (DAD) all maintained double-digit growth in terms of international passenger volume at 14%, 25%, 23% respectively.