The Transport Ministry is seeking the Prime Minister’s permission to grant Vietnam’s first cargo aviation license to IPP Air Cargo, a private company chaired by tycoon Johnathan Hanh Nguyen.
With a charter capital of VND300 billion ($13.1 million), IPP Air Cargo meets the minimum capital requirement to establish and maintain a cargo airline operating up to 10 aircraft.
In the first year, the airline is set to operate with five aircraft, including Boeing 737, Boeing 777, Airbus A330 planes, and similar aircraft. This number will gradually double in the next five years.
The carrier will operate on domestic routes connecting production centers such as Can Tho, Da Nang, Khanh Hoa, Central Highlands, Hai Phong and Quang Ninh with transshipment centers in Ha Noi and Ho Chi Minh City, before connecting to Northeast Asia, Southeast Asia, South Asia, and Europe.
Five Vietnamese airlines currently integrate commodities transportation into passenger flights, but there is yet to have a Vietnamese carrier to transport cargo only. 29 foreign airlines are operating cargo aircraft from 16 countries and territories to Vietnam.
The ministry said a cargo airline will bring specialized and quality freight services to customers, promoting the development of Vietnam’s logistics industry. This is in line with the overall development goals and strategy of transportation services development by 2020, with a vision to 2030, which were approved by the Prime Minister.
IPP Air Cargo is a 100% Vietnamese-owned enterprise with four shareholders including Lien Thai Binh Duong Import Export Ltd, represented by Johnathan Hanh Nguyen; the company’s CEO Le Hong Thuy Tien, Johnathan’s wife; his son Nguyen William Hieu; and Duy Anh Trading Ltd, represented by Nguyen Phi Long.
In accordance with its business strategy, the company intends to expand its capital to offset the capital shortage caused by the negative profit in the first three years, ensuring the minimum capital required to maintain the license.
Over the last 30 years, Vietnam's air cargo market has grown dramatically, with an output of 1.3 million tons in 2021 and an expectation of more than 1.52 million tons in 2022, an 83-fold increase from 1991 and 21.2% higher than 2019. The average annual growth rate of the period 1991-2022 is 15.3%.
Vietnamese airlines' share of international commodities transshipment was 18% in 2019 and 10-12% in 2020-2021.