According to news reports from the region, a large Vietnamese conglomerate that dominates the domestic market for retail distribution of luxury and premium fashion brands has abandoned plans to become Vietnam’s first all-cargo carrier.
Vietravel Airlines, a leisure carrier, or Vietnam Airlines will be in a position to become the first domestically owned and operated cargo carrier as a result of the decision.
IMEX Pan Pacific Group was developing a local air network to connect the rest of the country to the two international gateways in Hanoi and Ho Chi Minh City, while also providing direct access to airlift for export manufacturers. IPP Air Cargo had already leased four used Boeing 737-800 aircraft converted to carry cargo containers and planned to begin commercial operations in late November. GAMECO, a Boeing partner in Guangzhou, China, has already completed two conversions.
According to Nikkei Asia, IMEX Chairman Jonathan Hanh Nguyen told local media that the company decided to end the venture due to a slowdown in shipment volumes ahead of a looming recession.
The distributor for Burberry, Tommy Hilfiger, and Rolex had grand plans for a fleet of ten long-haul, widebody planes for international service. IPP Air Cargo had been having trouble obtaining an air operator certificate from Vietnamese authorities. FreightWaves’ inability to contact the company in recent weeks foreshadowed the shutdown.
The airline has withdrawn its application for licensing. According to the Vietnamese newspaper VN Express, Nguyen stated that if the air cargo market recovers, IPP Group may reconsider its plans.
Nguyen founded IPP Group in the mid-1980s, and it now has 17 subsidiaries and 18 joint ventures that operate everything from airport duty-free stores to fast-food franchises, fine-dining restaurants, retail stores, shopping malls, resort hotels, and airport construction. It is the sole distributor for over a hundred international fashion, cosmetics, spirits, and tobacco brands.
IPPG stated that its goal in launching a cargo airline was to increase competition in Vietnam’s underserved market, which is now dominated by foreign carriers. Officials say that due to ocean shipping congestion, agricultural and seafood exports are having difficulty reaching overseas customers.
Two issues for shippers are that Vietnam’s bilateral air agreements with other countries limit foreign carriers’ ability to increase service to Vietnam on their own. Because these airlines can only land in Ho Chi Minh City and Hanoi, businesses must find alternative transportation to distribute goods throughout the country.
According to Australian media reports and the website of meat producer Mort & Co, IPP Group signed a memorandum of understanding in March with Wagner Corp., an industrial real estate firm in Australia, to develop a direct-trade corridor between Toowoomba Wellcamp Airport in Queensland and Cam Ranh International Airport on Vietnam’s south coast. The service was set to begin in the first half of 2023.
The recent interest in establishing locally owned air cargo service in Vietnam stems from more manufacturers expanding into the country as a less expensive and more politically stable alternative to China. Over the last three decades, air cargo volume in Vietnam has grown at a 15% annual rate.
Sensing increased demand for air cargo, Vietnam Airlines recently announced plans to establish a separate freighter division, using retired passenger aircraft modified to carry containers on the main deck. Vietravel Airlines, founded last year by Vietnam’s largest travel agency, announced in September a joint venture with logistics provider Asean Cargo Gateway to develop VUair Cargo, a cargo airline.
VUair Cargo will use a fleet of converted 737-800 freighters to transport goods between Vietnam and large factories in China, Malaysia, Indonesia, and Thailand. Officials stated that the fleet would begin with up to four aircraft and would be doubled by the second year.
“Vietnam has a lot of electronics manufacturing and other high-value goods for export and is a very rapidly growing market for air cargo,” Mark Diamond, vice president at SASIWorld, said in an email.
“There is a lot of widebody passenger belly and freighter capacity into the two main hubs, but one advantage of a home-registered carrier is that they can fly out of airports that are closer to the manufacturing centers,” Diamond explained. “They can also route and schedule freighters to meet the needs of specific beneficial cargo owners — shippers or end customers — rather than relying on passenger aircraft routings, which are primarily influenced by passenger demand.”
