Vietnam’s tourism boom makes airlines to buy more jet fuel

Published on : Monday, December 17, 2018

The jet fuel demand of Vietnam will increase to a record this year as its tourism industry attracts a wave of new visitors and the country’s airlines are rapidly expanding.



According to data from CAPA Centre for Aviation, Vietnam is on track to have 38 million international passengers and 16 million visitors this year. That is up from 18 million passengers and 8 million visitors in 2015, according to the data.



The flow in air traffic has translated into a rush of jet fuel demand in Vietnam. Through November, the country has imported 1.87 million tonnes of the fuel, according to customs data, equal to 14.8 million barrels, and up 18 per cent from the same period last year.



Vietnam currently consumes about 18 million barrels of jet fuel per year.



By 2035, Vietnam will have 150 million airline passengers per year, nearly four times what it was in 2015, according to a 20-year forecast from the International Air Transport Association (IATA).



IATA also said that over the same period, India will have 442 million passengers, 3.6 times what it was in 2015, while China will have 1.3 billion passengers, 2.7 times what it was in 2015.



In November, Vietnam issued an aviation license to Bamboo Airways, which would be the country’s fifth airline after Vietnam Airlines, Jetstar Pacific Airlines, Vietjet Aviation and Vietnam Air Services Co.



Bamboo Airlines is expected to launch its first flights within weeks. It signed a provisional deal in July to buy 20 of the wide-body 787-9 jets from US manufacturer Boeing and agreed a memorandum of understanding with Europe’s Airbus for up to 24 of the narrow-body A320neo jets in March.



VietJet, which currently operates 60 Airbus jets, has signed a US$6.5 billion agreement to buy 50 new jets.



Vietnam’s jet fuel imports will continue to surge as the country only has two refineries, Dung Quat in the central province of Quảng Ngãi and Nghi Son in Thanh Hoa province, near to the capital Hanoi, which only started operations this year.



Nghi Son, once fully operational, will produce about 4.6 million barrels of jet fuel per year, said a source at the refinery. Dung Quat can produce as much as 2.3 million barrels per year, according to the company website.



Despite the steep growth position for Vietnam’s aviation sector, passenger growth might may be uneven as the country grapples with capacity constraints at its airports. Vietnam’s biggest airport Tan Son Nhat, serving Ho Chi Minh City in the south, receives about 10 million more passengers per year than it is designed to serve.



Now the Vietnam government is planning a second international airport at Long Thanh, 40km east of Ho Chi Minh City, that will serve 25 million passengers a year starting in 2025.









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