IPP Air Cargo is seeking permission to suspend its proposal to establish a cargo airline in Vietnam, citing negative impacts of the Russia-Ukraine conflict and the global economic recession.
"The global economic recession looms large with surging inflation, rising interest rates and turbulence in the price of energy," Le Hong Thuy Tien, CEO of IPP Air Cargo, explained in a document submitted to the Government Office, Ministry of Transport, and Civil Aviation Authority of Vietnam (CAAV).
Tien said the company would seek such a license again at a more suitable time when the global market recovers.
IPP Air Cargo JSC was established in March 2021 with billionaire Johnathan Hanh Nguyen as chairman and and his wife Le Hong Thuy Tien as CEO.
The transport ministry had asked the Prime Minister for permission to grant a license to the country’s first cargo airline in September.
The company had already signed a memorandum of understanding to buy 10 Boeing 777 aircraft and is in a rental agreement for four Boeing 737-800BCF aircraft with San Francisco-headquartered BBAM Aircraft Leasing & Management. One aircraft has been converted for cargo transport and delivered to the new company.
The IPP Air Cargo project had set its investment at $100 million, with 30% as shareholders’ equity and the balance raised from outside sources. It expected $71 million in revenue and hoped to transport 115,000 tons of cargo in its first year of operations. It was expecting to make profits from the fourth year onwards.
Explaining the rationale for setting up the cargo airline, CEO Thuy Tien had said at a forum in Hanoi earlier this month that major foreign-invested enterprise were moving their original equipment manufacturing (OEM) facilities to Vietnam.
"Vietnam is calling for foreign direct investment, but the country does not have a professional contingent of air freighters. A foreign firm in Hai Phong currently has to bring their goods to Noi Bai International Airport in Hanoi for delivery to other countries. If it can have its cargo transported by air directly from Hai Phong, it can save up to $500,000 a year," she said.
Jonathan Hanh Nguyen, also chairman of the Imex Pan Pacific Group (IPP Group), had said the airline planned to conduct its inaugural flight from Cat Bi Airport in Hai Phong city in November.