Vietnamese conglomerate Vingroup launches airline unit

After receiving a whopping $1-billion investment from Korean chaebol SK Group, Vietnamese conglomerate Vingroup is venturing into the aviation industry by launching an airline unit.

Vinpearl Air is the latest 1.3 trillion dong ($56-million) subsidiary from the house of Vingroup, according to Vietnam’s business registration authority.

Vingroup’s subsidiary VinAsia Tourism Development owns 45 per cent stake in Vinpearl Air while the balance stake is held by related persons.

The $16.8-billion company also said in a statement that it will partner with Canadian aviation electronics firm CAE Inc to establish VinAviation School and VinPearl Air Training Centre with the aim to upskill 400 pilots and mechanics every year.

“Vingroup sets a goal of solving the scarcity of pilots in the country, and at the same time creating a source of supply of pilots to the international markets,” said Vingroup’s CEO cum vice chairman Nguyen Viet Quang.

The diversified Vingroup’s business interests span from real estate development to retail to hospitality and services. Prior to the SK Group deal, Vingroup had in 2018 raised $400 million from Hanwha Asset Management. Its subsidiaries Vincom Retail and Vinhomes have also attracted major global investors such as Warburg Pincus and GIC, and have created blockbuster IPOs in the local stock market.

Vingroup’s entry into aviation comes at a time when several new players are vying for shares in a market dominated by national flag carrier Vietnam Airlines and low-cost carrier Vietjet.

Local real estate major FLC Group launched its Bamboo Airways earlier this year while travel agency Vietravel is looking to set up its own air transportation arm. Then, there is Thien Minh Group that is still exploring the aviation sector after failing to set up a joint venture with Malaysia’s AirAsia.

Vietjet, founded in 2007 as Vietnam’s first private budget airline, has overtaken Vietnam Airlines in the domestic flight segment and some routes in Asia.

New entrants into the aviation market might face some turbulence from the government quarters amid rising competition pressure for majority state-owned Vietnam Airlines, analysts from Maritime Bank Securities projected in their recent report.