Aviation and Aerospace to Vietnam

Trends and opportunities

The market

Vietnam is the seventh-fastest growing aviation market globally with 48 domestic and 130 international routes served by four domestic and 68 international airlines from 25 countries. Passenger traffic reached 106 million in 2018, an increase of 12.9% year-on-year and total cargo was over 1.5 million tons, an increase of 7.7%.

Some of the main factors driving growth include ASEAN Open Skies policy, a growing tourism industry and Vietnam’s participation in Free Trade Agreements. (Source: Civil Aviation Authority of Vietnam)

The market is gradually deregulating allowing for stronger involvement from the private sector throughout the whole supply chain including air operations, Maintenance, Repair and Overhaul (MRO), catering and air services.

Vietnam’s advanced manufacturing industry is nascent but growing rapidly. Vietnam welcomes opportunities to build local capabilities around advanced engineering, electronics, composite materials, system integration, and MRO. Australian businesses interested in the market should be prepared to invest in training the local workforce as a result.

Depending on the end-customer, Austrade recommends that Australian businesses seek to build a strong relationship with a local agent or distributor to mitigate differences between business environments. Austrade can provide an initial market entry briefing and encourage Australian businesses to reach out when considering market entry strategies.

Civil Aviation

According to Civil Aviation Authority of Vietnam’s (CAAV) Aviation Industry Development Masterplan, passenger traffic will reach 131 million by 2020 with a Compound Annual Growth Rate (CAGR) of 16% per year. At the same time, freight traffic will increase 18% per year to reach 2.2 million tons in 2020. At the same time, freight traffic will increase 18% to reach 2.2 million tons in 2020.

Vietnam’s domestic airlines operate a relatively young fleet with a combined size of 175 aircraft at September 2018. (Source: Vietnamnews, New aviation decree to ease burden for firms 3 January 2019) The majority of the current fleet are Airbus aircraft; 6% are Boeing 787 Dreamliners. Vietnam is committed to making investments worth about $US14 billion until 2030 (Source: Saigon Dau Tu 7 January 2019) to enhance infrastructure including airports, air traffic and MRO services.

Airport Development

Airports Corporation of Vietnam (ACV), the largest airport developer in Vietnam, currently manages and operates a network of 22 airports throughout the country, of which nine are international and 13 are domestic.

Over $US5 billion will be needed to build the new Long Thanh airport and to upgrade Noi Bai and Tan Son Nhat airports from 2018-2021. (Source: Vietnamplus, ‘Three major airports need over 5 billion USD for upgrading’ 27 December 2018)

These upgrades include advanced technologies and equipment, especially airport security equipment. Some other airports to be upgraded under ACV’s plan include Cat Bi, Chu Lai, Phu Bai, and Vinh.

Air Traffic Management

Vietnam Air Traffic Management (VATM) is the state-owned monopoly that provides air navigation services for all aircraft operating at airports nationwide and over Vietnam air space. In February 2018, VATM signed a contract with the MITRE Corporation for technical assistance on proposed Air Traffic Flow Management Implementation Master Plan. This contract is jointly funded by the United States’ (US) Trade Development Agency (TDA) and the VATM. (Source: VATM, ‘VATM signed contract with MITRE Corporation’ 4 January 2019)

Maintenance Repair and Overhaul (MRO)

Vietnam Airlines Engineering Company (VAECO), a subsidiary of Vietnam Airlines, supplies most of the MRO services in the local market from both Hanoi and Ho Chi Minh City maintenance facilities. VAECO provides extensive services for all types of aircraft for the entire Vietnam Airlines fleet and more than 40 other airlines operating in Vietnam, including aircraft maintenance for Airbus 320/321/330/350, Boeing 737/777/787, ATR 72, and Fokker 70. (Source: VAECO)

Currently, it is challenging for MRO service providers to acquire hangars at Noi Bai and Tan Son Nhat airports due to congestion. It is more realistic to partner with existing players and/or explore opportunities in other airports such as Da Nang or Cam Ranh.

Opportunities

Vietnam is still lacking MRO capacity and there is demand for new service providers to improve capacity.

In line with the Vietnamese Government’s agenda to develop airport facilities and infrastructure, Australian businesses can also find opportunities in:

  • Architectural, engineering and construction services
  • Construction management services for airports and terminals
  • Airport ground support equipment
  • Equipment for passenger terminals
  • Air traffic management systems
  • Safety and security equipment
  • Telecommunication systems
  • Aviation management software
  • Aircraft parts
  • Training services
  • Aircraft maintenance and engine overhaul services.

Currently, there is a small number of foreign investments in the aviation manufacturing industry such as MHI Aerospace Vietnam, a subsidiary of Japanese Mitsubishi, making the doors of passenger cabins and inboards flaps for the Boeing 777 and Nikkiso Vietnam which makes blocker doors of composites for commercial aircraft. However, Vietnam’s expertise in sophisticated aircraft components and accessories is burgeoning. Most of the manufacturing done in-market tends to focus on less complex tasks such as land services and flight control equipment. High-end and high-value advanced manufacturing investments may attract government incentives to develop Vietnamese industry capability.

Similarly, there are opportunities for education and training providers to assist local businesses to embrace innovative technologies and equipping workers with relevant skills.

Marketing your products and services

Market entry

Australian businesses preparing to enter the market must plan strategically, and be persistent and consistent with face-to-face follow-ups. It often takes up to a year, and several face-to-face meetings, to make a successful sale.

To enter or expand in Vietnam, depending on the nature of the business, Australian companies may directly deal with end-users for specific products or indirectly through the appointment of an agent or distributor. For aircraft spare parts and specifically required products, it is more effective to target end-users directly. In order to be successful, Australian suppliers are encouraged to visit the market and spend time assessing market needs, sales potential and possible distributors for their products. It is important to conduct a detailed analysis of the market prior to entry.

Firms seeking a direct presence in Vietnam can do so by establishing a representative office, branch or foreign investment project.

Product demonstrations and educational seminars in line with market demand can be a positive way to build brand recognition among potential end-users. An appropriate agent/ distributor can assist in contacting developers, potential buyers/ users, provide after-sales service as well as organising product demonstrations. Providing technical support to your local partner will also signal your commitment to the market.

Austrade can provide on-going support for Australian businesses to engage in either a broad industry approach, or specific projects and tenders, by leveraging the ‘badge of government’ and its strong relationships with government and local industry players.

As a first step, Austrade can provide a quick market assessment to explore potential opportunities for your products or services. If opportunities are identified, Austrade can assist with in-depth analysis and/or identification of potential key distributors/buyers. Austrade encourages Australian businesses to visit the market to understand local business practices and gain the latest market insights directly from local experts. You may utilise our in-market business development manager to maximise your market visit.

Attending aviation related tradeshows/conferences in market also provides opportunities for businesses to engage with local industry stakeholders. Austrade can assist with business matching, and/or additional relevant market visit programs.

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

  • develop international markets
  • win productive foreign direct investment
  • promote international education
  • strengthen Australia's tourism industry
  • seek consular and passport services.

Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.