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The Vietnamese aviation industry stands as a vital catalyst for economic growth and enhanced global connectivity. With resilience and determination, it has rebounded to near pre-pandemic levels, symbolizing its significance in Vietnam's development. As we gaze into the next decade, challenges loom, primarily in the form of a tight labor market and a shortage of skilled workers. However, these challenges present opportunities for innovation and growth. In this article, we delve into the current state of Vietnam’s aviation fleet, dissect the imminent challenges, and propose technology-driven solutions for a prosperous and sustainable future. Investors and stakeholders, fasten your seatbelts, as we navigate the headwinds and chart a course for success in this dynamic sector.
The Rebounding Aviation Industry
The Vietnamese aviation industry is poised for a remarkable resurgence, mirroring its pre-pandemic vigor. As of 2022, the domestic market had not only made a full recovery but expanded by an impressive 30% when compared to the passenger numbers of 2019's summer season. This remarkable rebound signifies a return to normalcy in domestic air travel, offering a glimpse into the sector's remarkable resilience.
In parallel, the international market, which faced a more extended recovery timeline, began its comeback in late 2022, attaining approximately 50% of the pre-pandemic levels. This gradual resurgence demonstrates the sector's adaptability and determination to regain its global connectivity.
The impact of the pandemic on the aviation fleet was profound. In early 2019, when the pandemic took its toll, domestic airlines were compelled to scale back their fleets significantly. At the height of the crisis, the total fleet was reduced to 225 aircraft. Out of these, 190 planes remained operational, while 12 underwent maintenance, and 23 remained grounded. The path to recovery would necessitate not just a return to these numbers but also an expansion to accommodate growing demand.
Looking ahead to 2023, the domestic market is forecasted to cater to approximately 45.5 million passengers, a testament to the strong resurgence in travel appetite. To meet this surging domestic demand alone, the industry would require 182 aircraft, highlighting the need for fleet expansion.
Moreover, the appetite for international travel is also on the rise. In 2023, Vietnamese airlines anticipate transporting around 13.6 million international passengers, necessitating the deployment of 57 aircraft for international routes.
Recognizing the need to meet the escalating demand, the Civil Aviation Administration of Vietnam (CAAV) proposed that five domestic airlines increase their fleet sizes to 234 aircraft. This move was a response to the growing demand witnessed during the Lunar New Year Holiday in late January 2023, indicating a resurgence in travel enthusiasm. The expansion aligns with the aviation industry's global resurgence, positioning Vietnam to be a key player in the world aviation recovery.
Challenges Ahead: Labor Market and Skilled Workforce Shortage
The state of Vietnamese aircraft fleet- on its path to recovery and expansion, is encountering a formidable challenge – a severe shortage of human resources. Multiple factors are converging to create this labor crunch, threatening to impede the aviation industry's sustained growth.
Tran Thi Thai Binh, the head of the Vietnam Aviation Academy's Air Transport Economics Department, emphasized the pressing demand for aviation professionals at major airports like Tan Son Nhat, Noi Bai, the soon-to-be-constructed Long Thanh airport, and within airline companies. Currently, the aviation sector employs around 44,000 individuals in roles spanning transportation, port, and flight operations. However, this workforce is insufficient to meet the burgeoning demands of the industry.
The outlook for human resource demand in the aviation industry remains robust, particularly from 2023 to 2030. Dr. Bui Song Thu, director of the Research Institute, highlighted critical areas facing personnel shortages, including airport supervision, ground operations management, aircraft engineering, aircraft maintenance, and pilots.
A report by the International Air Transport Association (IATA) underscores the urgency of addressing this challenge. The aviation workforce must expand rapidly to accommodate a projected two to four-fold increase in passengers over the next two decades.
Luong Thi Xuan, founder of Vietnam's first Aviation Exhibition and CEO of the Aviation Exhibition Joint Stock Company, emphasized that the workforce shortage extends beyond mere quantity – it encompasses issues of quality and expertise.
Efforts to bridge the skills gap are underway, with the Vietnam Aviation Academy planning to offer training in over 20 majors at both undergraduate and postgraduate levels. These programs cover a broad spectrum of activities, including technical practices, aviation operations, transportation economics, and aviation services. However, in the 2022-2023 academic year, the academy's admissions target of 2,635 students, including those majoring in flight operations and aviation engineering, falls significantly short of market demand.
In the realm of pilot training, Vietnam's existing capacity is limited, with the Viet Flight Training school producing fewer than 100 pilots annually. While some private aviation companies have initiated high-quality specialized training programs, they have not adequately met the soaring demand. The shortage of skilled aviation professionals poses a critical challenge for the industry, requiring innovative solutions to secure its future growth and prosperity.
Technology Solutions for Workforce Disruptions
In the face of a severe labor shortage for aviation fleet, Vietnam aviation industry’s leaders are turning to technology as a lifeline, recognizing its pivotal role in mitigating workforce disruptions and ensuring continued growth.
One pressing need is the development and implementation of innovative platforms and systems capable of predicting workforce scenarios and offering immediate solutions. By harnessing the power of predictive analytics, artificial intelligence (AI), and automation, the industry can proactively address labor gaps and enhance operational efficiency. These technologies can analyze historical data, market trends, and workforce patterns to anticipate future shortages and guide decision-makers in taking timely actions.
The advantages of embracing technology are multifaceted. Predictive analytics can help airlines and airports optimize staffing levels, reducing the impact of sudden disruptions. AI-driven systems can streamline recruitment processes, identifying suitable candidates more efficiently and expediting the onboarding of new hires. Automation, on the other hand, can be applied to various aspects of aviation operations, from aircraft maintenance to baggage handling, improving productivity and safety.
For instance, AI-powered chatbots and virtual assistants can aid human resources departments in managing inquiries and initial candidate screenings. Automated scheduling and rostering systems can optimize workforce allocation, matching available personnel with operational demands.
As Vietnam progresses on its digital transformation journey, the aviation industry can leverage the prevailing technological landscape to address its workforce challenges. Emerging technologies such as blockchain, the Internet of Things (IoT), and cloud computing can further enhance workforce management, enabling real-time tracking and data-driven decision-making.
One compelling example of technological integration comes from Vietnam Airlines, a pioneer in adopting advanced systems to enhance its flight operations and business performance. Vietnam Airlines has embraced the Salesforce B2B/B2C customer management system, fostering improved customer relationship management. The airline has also elevated its aircraft maintenance management with the AMOS MRO-IT system, ensuring efficient and reliable aircraft upkeep.
Moreover, Vietnam Airlines has invested in the enhancement of its commercial reporting, sales management, and data synchronization system. This strategic move bolsters the airline's ability to respond swiftly to changing market dynamics and customer needs.
Final Thoughts
The Vietnamese aviation industry is poised for remarkable growth, but it must grapple with significant challenges regarding its aircraft fleet, particularly in the labor market and workforce shortages. As the industry rebounds to near pre-pandemic levels, it faces the critical task of meeting the escalating demand for skilled professionals. However, with these challenges come tremendous opportunities for innovation and transformation.
By embracing cutting-edge technology solutions, such as predictive analytics, AI, and automation, Vietnam’s aviation fleet can proactively address workforce disruptions and bolster operational efficiency. The strategic integration of these technologies will be paramount in ensuring the industry's resilience and long-term sustainability.
At Viettonkin, we understand the evolving landscape of the Vietnamese aviation fleet and offer expert guidance and support to investors and stakeholders seeking to navigate these challenges.
With a collaborative endeavor between IBS Software - a leading SaaS solutions provider to the travel industry globally, and Viettonkin Consulting - a multi-disciplinary group of consulting firms promoting international business relationships in ASEAN, the latest whitepaper "Unleashing Vietnam’s Potential: Accelerating Growth in the Aviation Industry through Digital Transformation" details the current state, challenges, and opportunities of digital transformation in this rapidly expanding market.
Access the full version of this whitepaper at: https://www2.ibsplc.com/whitepaper-unleashing-vietnams-potential-vn.htmlReach out to us for strategic insights and assistance in exploring investment avenues in this thriving industry. Your journey to success in Vietnam's aviation sector begins with Viettonkin.
