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Market Strategy – AIRLINES STOCKS COULD RECEIVE A MEDIUM-TERM BOOST FROM THE RELAXATION OF SECTOR FOREIGN OWNERSHIP LIMITS

Strategy Note 20/07/2018    166

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A diversified capital base could prolong the health of the Vietnam airline industry
Vietnam is one of the most dynamic aviation markets in Asia-Pacific, with passenger volume rising by a 4-year CAGR (2013-17) of 19.9%. We believe a relaxation on FOL of domestic airlines would decrease capital costs, allowing airlines to scale up their fleets, thereby allowing them to reap economies of scale and network effects from route expansion. A change in foreign ownership could also allow smaller upstarts such as Bamboo Airlines (Unlisted) to partner with foreign airlines and potentially grab market share from the incumbents.

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