VietNam Business

Monday, December 13, 2010

Competition heats up in domestic airline market

Competition heats up in domestic airline market Competition in the local airline market is set to get tougher as large carriers try to boost sales with lower airfares and new players get ready to launch their service, experts said.

National carrier Vietnam Airlines has launched a new program, offering discounts of up to 50 percent on domestic flights. Its airfares now cost between VND400,000 and VND860,000.

Low-cost carrier Jetstar Pacific have been selling 1,000 tickets at only VND100,000 from September 9 to October 10.

Vo Huy Cuong, head of the Civil Aviation Administration’s Air Transport Department, said airlies typically offer cheaper fares during the low season from September to October.

When both Vietnam Airlines and Jetstar Pacific cut their prices, the competition would get really tough on new players like Air Mekong and Blue Sky Air, said Cuong.

Air Mekong, a private air carrier that has partnered with Skywest Inc., will start its flights on October 9. The company will use four CRJ-900 aircraft produced by Montreal-based Bombardier Inc. for 20-30 flights per day.

An Air Mekong representative said the carrier is prepared for the competition. Each airline has its own strategies and Air Mekong will focus on business class services, the representative said.

Meanwhile, Blue Sky Air, another new carrier, said it would also have its own niche market, using helicopters for its on-demand service.

An expert who wished to be unnamed said as private carriers are not supported financially by the government, they have to take measures to prevent losses in the long term otherwise they would be caught in another Indochina Airlines’ situation.

Indochina Airlines, the first private airline to run flights in Vietnam, early this year suspended its services due to debt problems.

The expert also said unlike Vietnam Airlines, smaller carriers are now allowed to operate international routes and thus they will not have more revenues to offset losses caused by domestic services.

Cuong said that the market has great potential for growth, but all the players would need to be competitive enough to stay in the game.

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Competition heats up in domestic airline market

Competition heats up in domestic airline market Competition in the local airline market is set to get tougher as large carriers try to boost sales with lower airfares and new players get ready to launch their service, experts said.

National carrier Vietnam Airlines has launched a new program, offering discounts of up to 50 percent on domestic flights. Its airfares now cost between VND400,000 and VND860,000.

Low-cost carrier Jetstar Pacific have been selling 1,000 tickets at only VND100,000 from September 9 to October 10.

Vo Huy Cuong, head of the Civil Aviation Administration’s Air Transport Department, said airlies typically offer cheaper fares during the low season from September to October.

When both Vietnam Airlines and Jetstar Pacific cut their prices, the competition would get really tough on new players like Air Mekong and Blue Sky Air, said Cuong.

Air Mekong, a private air carrier that has partnered with Skywest Inc., will start its flights on October 9. The company will use four CRJ-900 aircraft produced by Montreal-based Bombardier Inc. for 20-30 flights per day.

An Air Mekong representative said the carrier is prepared for the competition. Each airline has its own strategies and Air Mekong will focus on business class services, the representative said.

Meanwhile, Blue Sky Air, another new carrier, said it would also have its own niche market, using helicopters for its on-demand service.

An expert who wished to be unnamed said as private carriers are not supported financially by the government, they have to take measures to prevent losses in the long term otherwise they would be caught in another Indochina Airlines’ situation.

Indochina Airlines, the first private airline to run flights in Vietnam, early this year suspended its services due to debt problems.

The expert also said unlike Vietnam Airlines, smaller carriers are now allowed to operate international routes and thus they will not have more revenues to offset losses caused by domestic services.

Cuong said that the market has great potential for growth, but all the players would need to be competitive enough to stay in the game.

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Light metro line project gets off ground in Hanoi

Key bridge, boulevard in Hanoi open to traffic

HCMC – Work started Saturday on a pilot light metro line project stretching 12.5 kilometers to link Hanoi Station and Nhon Station in the capital city, which at nearly US$1 billion is the most costly public transport project there.

This urban railway project will form part of the Route No. 3 under the master plan for Hanoi City’s transport and communication development between now and 2020, the Government’s website www.chinhphu.vn reports. The light metro line will go through five inner districts of Hanoi, namely Tu Liem, Cau Giay, Ba Dinh, Dong Da and Hoan Kiem, the project owner said at the ground-breaking ceremony graced by Prime Minister Nguyen Tan Dung.

This metro line will be comprised of 8.5 kilometers of elevated railway and four kilometers of underground section. Along the route will be 12 stations, including four underground ones, according to the Hanoi Urban Railway Management Unit.

The total invested capital for the project is nearly 790 million euros, or some US$1 billion

In related infrastructure news, Vinh Tuy Bridge spanning the Red River in Hanoi City was partially opened to traffic on Sunday, helping ease congestion on Chuong Duong Bridge and Long Bien Bridge.

The new bridge, which links Long Bien and Hai Ba Trung districts, is comprised of the main spans of 3.7 kilometers and two approach roads with a combined length of 1.68 kilometers. The total cost is VND3.6 trillion, or around US$190 million.

Hanoi City will also open to traffic Thang Long Boulevard this Wednesday, which at 28 kilometers will be the longest boulevard in the country. Its width is 140 meters.

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Brokers predict seesaw trading this week

HCMC – Securities brokers predicted the market would see saw in narrow range again this week with a VN-Index hovering between 445 to 460 points as investors would continue waiting for clearer information relating to Decree 13.

The market ended the previous week with three falling and two rising sessions while liquidity sharply tumbled on Wednesday and Friday. The VN-Index lost 7.87 points, or 1.72%, against the previous week to close at 449.71.

Although the global markets continued to stage positive developments, the local market was still impacted by bad information from the macro economy. Vietnam’s consumer price index (CPI) in September late last week was estimated to increase by 1.31% from August, taking the index to 6.46% in the first nine months of the year while gold and U.S. dollar deposit rates increased.

“The information will keep investors away from the playground this week. Meanwhile, they are worried that supply may far exceed demand as many enterprises will list on the bourse in the future while the cash flow has yet to improve,” said APEC Securities Co.

However, trading volume on the market improved strongly, averaging out at 46.7 million shares worth nearly VND1.2 trillion daily, increasing by 11% and 21.6% against the week earlier respectively. Closing the week, only 49 stocks gained grounds while up to 189 stocks ended with losses.

Foreign participation once again decreased but the investors remained net buyers for around 18.2 million shares worth VND759 billion during the week.

“They were still important support for the index and, for the long-term vision, seem to acquire more blue-chips on the market,” APEC said.

HCMC Securities Corp. (HSC) said the September index that came out in strong increase of 1.31% proved all commentators who had anticipated a much lower figure over the past weeks completely wrong. “Therefore, the effect on investor sentiment can only be felt on Monday and we could certainly get a backlash from the higher than expected figure. The final version of Decree 13 is indeed said to contain very little to excite the banking sector, so we should not expect too much of that either,” HSC said.

“Nevertheless, it looks like we could be coming to the end of what has been an extended period of bad news and fear for even more bad news. That means that most of the negative pressure has already been incorporated into last Friday’s share prices. We normally should expect some pressure in the short term, but with the low valuations that we are seeing in the market, it seems that downside risk has become rather limited,” the broker added.

The Hanoi market saw up to four falling sessions last week after gaining a modest ground on the first trading day. The HNX-Index dropped 3.22 points, or 2.42%, from the week earlier to 129.63. The market’s liquidity was higher with the average daily volume of 36.5 million shares worth VND894 billion, increasing by 4% and 3.7% against the week earlier respectively.

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Brokers predict seesaw trading this week

HCMC – Securities brokers predicted the market would see saw in narrow range again this week with a VN-Index hovering between 445 to 460 points as investors would continue waiting for clearer information relating to Decree 13.

The market ended the previous week with three falling and two rising sessions while liquidity sharply tumbled on Wednesday and Friday. The VN-Index lost 7.87 points, or 1.72%, against the previous week to close at 449.71.

Although the global markets continued to stage positive developments, the local market was still impacted by bad information from the macro economy. Vietnam’s consumer price index (CPI) in September late last week was estimated to increase by 1.31% from August, taking the index to 6.46% in the first nine months of the year while gold and U.S. dollar deposit rates increased.

“The information will keep investors away from the playground this week. Meanwhile, they are worried that supply may far exceed demand as many enterprises will list on the bourse in the future while the cash flow has yet to improve,” said APEC Securities Co.

However, trading volume on the market improved strongly, averaging out at 46.7 million shares worth nearly VND1.2 trillion daily, increasing by 11% and 21.6% against the week earlier respectively. Closing the week, only 49 stocks gained grounds while up to 189 stocks ended with losses.

Foreign participation once again decreased but the investors remained net buyers for around 18.2 million shares worth VND759 billion during the week.

“They were still important support for the index and, for the long-term vision, seem to acquire more blue-chips on the market,” APEC said.

HCMC Securities Corp. (HSC) said the September index that came out in strong increase of 1.31% proved all commentators who had anticipated a much lower figure over the past weeks completely wrong. “Therefore, the effect on investor sentiment can only be felt on Monday and we could certainly get a backlash from the higher than expected figure. The final version of Decree 13 is indeed said to contain very little to excite the banking sector, so we should not expect too much of that either,” HSC said.

“Nevertheless, it looks like we could be coming to the end of what has been an extended period of bad news and fear for even more bad news. That means that most of the negative pressure has already been incorporated into last Friday’s share prices. We normally should expect some pressure in the short term, but with the low valuations that we are seeing in the market, it seems that downside risk has become rather limited,” the broker added.

The Hanoi market saw up to four falling sessions last week after gaining a modest ground on the first trading day. The HNX-Index dropped 3.22 points, or 2.42%, from the week earlier to 129.63. The market’s liquidity was higher with the average daily volume of 36.5 million shares worth VND894 billion, increasing by 4% and 3.7% against the week earlier respectively.

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Interbank Forex eyes Vietnam market

HCMC – The U.S.-based broker of off-exchange retail foreign currency, Interbank Forex, has unveiled its plans to seeks partners in Vietnam through its Private Label Forex Trading Tools and Education.

Speaking at a press conference held in HCMC on Friday, an executive of the company said that it is looking for opening a representative office as soon as possible to expand its operation in Asia, after Korea. Its aim is to examine the market and provide information to Vietnam’s leading financial and banking executives, said Abigail DeGraff, Interbank Forex’s Global Public Relations.

She said that the company is looking for some five to ten local partners from banks, investment firms, securities brokerage houses and financial institutions.

In a press release sent to the Daily earlier, Peg Reed, Interbank FX managing director of global partnerships, said: “This is our first step in partnering with Vietnamese financial institutions. Our track record demonstrates that in countries where banks readily adapt our private-label Forex products, we soon follow with investments and staffing.”

The company said that its research shows that the Vietnamese market is highly potential. An estimate from the World Bank, says the company, shows that Vietnamese people are keeping some US$9.7 billion in dollar notes at home.

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Travel expo to upgrade into Mekong Sub-region event

HCMC – The organizing committee of the International Travel Expo in HCMC is working on a plan to heighten its status to make the expo a Mekong Sub-regional event by engaging Myanmar and China’s Yunnan Province, an official said.

La Quoc Khanh, deputy head of the committee, said that an invitation has been extended to Myanmar, calling this nation to join this year’s event rather than only three Indochina countries. Later, Yunnan of China will also be asked to participate in following events to make it a professional travel expo of the sub-region in the near future, he said.

“We want to make a new theme to promote the common image of the four countries in 2011 once a common voice is reached among the four tourism ministries of Vietnam, Laos, Cambodia and Myanmar in this travel expo,” he said in a meeting to promote the event in HCMC last Friday.

The sixth annual event will take place from this Thursday to Saturday at the Saigon Exhibition & Convention Center in Phu My Hung, District 7.

As of last Friday, 170 local and foreign exhibitors have registered to join the expo. More than 150 foreign buyers will also join the event compared to 100 buyers last year.

Alongside the exhibition will be the ASEAN Tourism Investment Forum, Tourism Ministers Meeting, Tourism Alliance Awards and the ITE HCMC 2010 Golf Tournament. Familiarization trips will be organized for foreign guests to explore tourist attractions and services.

At the event in 2007, tourism ministers of Vietnam, Laos, and Cambodia inked a joint declaration on tourism cooperation to make the three countries a common destination for international tourists.

Khanh said the tourism sector has not been doing well some joint activities like developing human resources and drawing a common tourist map. However, via the cooperation, the travel expo has been better known worldwide, and at the same time, the three Indochina countries’ tourism image has also been better promoted.

The Vietnam National Administration of Tourism and the HCMC Department of Culture, Sports and Tourism are collaborating with IIR Exhibitions Pte Ltd and VINEXAD to organize the international travel expo.

Khanh said that the organizing committee in this year offers incentives to small and medium-scale companies who want to join the event. “Such companies can enjoy a discount of up to two-thirds compared to big-scale companies,” he said.

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