IndiGo announced late last month the launch of a daily flight from Hanoi to Kolkata from 3-Oct-2019. VietJet announced on 19-August-2019 the launch of four weekly flights from Ho Chi Minh to Delhi from 6-Dec-2019 as well as three weekly flights from Hanoi to Delhi on 7-Dec-2019.
VietJet's announcement does not come as a surprise as the airline unveiled at a Mar-2018 Vietnam-India business forum in Delhi plans to launch services to India. At the time VietJet stated its intention to operate a four times weekly service from Ho Chi Minh to Delhi without providing a launch date. IndiGo's recent decision to enter the Vietnamese market may have spurred VietJet to finally firm up its India plans.
Ho Chi Minh-Delhi is the largest Vietnam-India city pair based on one-stop bookings. Ho Chi Minh-Mumbai is the second largest and Hanoi-Delhi is third largest followed by Hanoi-Mumbai. Focusing on Delhi initially is sensible for VietJet as launching two Indian destinations at once would require significant investment and be relatively risky. Mumbai could be launched in 2020 or 2021 if the initial Delhi routes prove successful.
CHART - Despite being two of the world's emerging aviation economies, nonstop connectivity between Vietnam and India has until now been limited to a small number of charter flights
Source: CAPA - Centre for Aviation and OAG
Hanoi-Kolkata is the seventh largest Vietnam-India city pair. While there are not enough nonstop passengers to really justify a daily services IndiGo has a domestic hub in Kolkata, which it leverages for other international routes including Bangkok, Hong Kong, Singapore and (from 20-Sep-2019) Yangon.
Kolkata is only around three hours from Hanoi, making it an ideal connection point for Vietnam-India traffic. Delhi and Mumbai is a longer five hour flight from both Hanoi and Ho Chi Minh.
CAPA - Centre for Aviation published a comprehensive analysis report on the Vietnam-India market in Oct-2018, highlighting the opportunities for nonstop services: "Vietnam and India are among the 10 most populated countries in Asia and are only three to six hours apart by air. Vietnam is also an increasingly popular tourist destination and India is one of the fastest growing outbound markets," it said.
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Indian visitor numbers to Vietnam have expanded rapidly this decade, from a tiny base of only 16,000 in 2010 to a projected 200,000 in 2020. The outbound Vietnam-India market is smaller but is also growing. Gaya, a Buddhist religious pilgrimage site, is particularly a popular destination for Vietnamese travellers - Jetstar Pacific operated a charter service from Hanoi to Gaya over the last two winter seasons.
There have never actually been any scheduled nonstop services between Vietnam and India but Jet Airways did previously offer a one-stop same aircraft service to Ho Chi Minh via Bangkok from Nov-2014 to Mar-2016.
IndiGo will have an advantage over VietJet as it can offer one-stop connections from Kolkata to over 30 Indian cities. It will also be able to leverage its strong brand and distribution network in India, which is critical given that Indian residents account for most of the Vietnam-India traffic.
Meanwhile, VietJet's brand is not known in India, which is never an easy market for a new foreign entrant to penetrate due to its unique distribution landscape. While Delhi is the largest Indian gateway for Vietnam-India traffic, the market is very fragmented and Delhi accounts for less than 30% of total Vietnam-India traffic.
VietJet does offer extensive domestic connections in Vietnam but does not have an Indian airline partner to provide feed on the Delhi end. "While there is now sufficient demand to support direct services, VietJet will have to overcome stiff competition from sixth freedom competitors, which have the advantage of offering multiple Vietnam-India city pairs," CAPA warned in its Oct-2018 report.
VietJet and IndiGo mainly cater to leisure passengers but have also succeeded at attracting business traffic with a tailored offering. VietJet's Skyboss product includes priority check-in, lounge access, meals on board and the best seats (including bulkhead and emergency row).
IndiGo has a similar product aimed at corporate and business passengers. Both airlines are expected to attract corporate traffic on their new Vietnam-India flights given the convenience of the only nonstop options between the countries.