IPP Air Cargo, the first full-fledged cargo airline in Vietnam, aims for launch as early as 2022 amid the Covid 19 Pandemic to take advantage of the growing demand for air freight in Vietnam.
Billionaire Johnathan Hanh Nguyen is the chairman of Imex Pan Pacific Group (IPP), a premium brand distribution and retail company situated in Ho Chi Minh City. In early June, the Ministry of Planning and Investment and other relevant organizations received an application for the establishment of a cargo airline.
This Air freight is established with a VND2.4 trillion ($103.6 million) initial investment, of which IPPG will own 30%, and other investors would own the remainder. It aimed for $71 million in income in the first year of operation, commencing with a fleet of five freighters and expanding to seven and 10 in the second and third years, respectively. They plan to transport about 115,000 metric tons of cargo at an operation.
The new carrier registered its business on March 10 this year under the IPP group. They will be both specializing in domestic and international cargo. The new freight line intends to develop lines connecting domestic airports to Hanoi’s Noi Bai International Airport and Ho Chi Minh City’s Tan Son Nhat International Airport, with flights to 16 local destinations.
IPP Air Cargo will transfer commodities from Vietnam to other countries, such as fresh fruits and frozen seafood, and will collaborate with foreign partners to deliver goods from other countries to Vietnam, particularly high-value items.
Due to the COVID-19 epidemic in early 2020 and the fact that Vietnam no longer has a dedicated cargo airline, several Vietnamese airlines used passenger planes to convey products, resulting in a significant drop in passenger numbers.
According to the country’s General Statistics Office, Vietnamese exports increased by 28% yearly to $157 billion in the first half of 2021. IPPG sees an opportunity to capitalize on the increase in air cargo demand that has occurred as a result of the coronavirus outbreak. According to the association, foreign competitors control roughly 80% of the country’s aviation imports and exports.
“Exporting enterprises are having major problems,” said IPPG Chairman Johnathan Hanh Nguyen, citing a lack of competition in the air freight industry and high transportation costs as reasons. Nguyen stated that he intends to lower shipping charges.
“At the height of the epidemic, I witnessed a five-fold increase in freight charges, and I got even more motivated,” he added, noting that foreign carriers controlled 88 percent of Vietnam’s airfreight industry.
“Foreign airlines may establish their pricing because they are almost alone in the industry, with no competition,” he continued. If I do nothing, air freight demand will stay clogged, and pricing fluctuation would make domestic export-import enterprises difficult.”
Mr. Nguyen stated that with a $100 million investment, IPP Air Cargo hoped to operate five freighters in the first year and then by the third year, starting with domestic routes and growing internationally, carrying cargo such as e-commerce, seafood, and fresh fruit and vegetables.
In contrast to foreign carriers, which are limited to Hanoi and Ho Chi Minh City, IPP would fly to 16 provincial airports across Vietnam, he said.
He continued, “We aim to build logistics warehouses at Tan Son Nhat, Noi Bai, Cam Ranh, Da Nang, Can Tho, and, eventually, Long Thanh airports to transport commodities from other locations to these centers.”
However, low-cost carrier Vietjet has been operating a cargo plane since 2014 but has yet to realize its long-held intentions to enter the freighter sector. The airline is certain that everything will work out in their favor. IPP Air Cargo will begin operations once it receives official certification from the government, which may happen as early as the beginning of next year.