Establishing a cargo airline is appropriate for Việt Nam as the cargo transportation demand kept increasing steadily. — VNA/VNS Photo

HÀ NỘI — The Ministry of Transport has sought the Prime Minister’s approval to issue a licence for the first cargo airline in Việt Nam, IPP Air Cargo, as freight demand increases rapidly.

The application document of IIP Air Cargo met all requirements for the licence, the ministry said.

The ministry said Việt Nam’s first cargo airline was appropriate to the country’s transport services development strategy for 2030, which targeted the development of a fleet of 8-10 cargo aeroplanes, which would contribute to promoting the logistics industry.

“The cargo airline will contribute to the growth of cargo transport of Vietnamese airlines by around 10-15 per cent per year,” the ministry said in a document on Thursday.

The volume handled by IPP Air Cargo was expected to increase by 18-20 per cent per year.

The ministry also said that Việt Nam’s participation in the ASEAN Single Aviation Market, an agreement on the liberalisation of air transport in 2015, was creating opportunities for IPP Air Cargo to expand markets and increase its competitiveness.

The operation of a cargo airline would also help generate foreign currency, facilitate goods flow and drive local economic growth.

Starting from 1991, the air cargo market of Việt Nam handled more than 18,380 tonnes. After more than 30 years, the volume of cargo handled in 2021 increased to 1.3 million tonnes and was expected to reach 1.52 million tonnes in 2022. The average growth rate was 15.3 per cent from 1991 to 2021.

Việt Nam’s air cargo is currently handled by five existing airlines that provide passenger transportation.

Existing Vietnamese airlines held a share of 11 per cent of the international cargo transport in 2020-21 and 18 per cent in 2019.

Currently, 29 foreign airlines operate cargo aeroplanes from 16 countries and territories to Việt Nam.

Due to the pandemic, the number of flights carrying passengers and goods dropped sharply while demand for cargo transportation increased significantly, pushing up freight rates by 3-4 times.

IPP Air Cargo was established on March 10, 2021, with an initial investment of VNĐ300 billion (US$13 million), with air cargo transportation being its major business line.

The airline planned to initially operate five aircraft, including Boeing 737, Boeing 777, Airbus 330 planes in the first year of operation and double the fleet in the next five years. — VNS