More foreign giants to set up its own airline in Vietnam

More foreign giants to set up its own airline in Vietnam

With a Russian company recently revealing its plan to establish an airline in Vietnam, Vietnamese tourism firms will have to “fight against giants” to keep their market share, an industry insider said.

Russian travel giant Pegas Touristik, which has brought around 500,000 Russian vacationers to Vietnam over the past four years, is seeking support from Vietnamese agencies to set up its own airline to facilitate the service, The Saigon Times Online has reported.

Pegas Touristik has been cooperating with local partners to bring tourists to Vietnam via charter flights, and has recently established a hotel management firm and a travel company in the Southeast Asian country, according to Saigon Tiep Thi (Saigon Marketing).

If the Pegas Touristik carrier becomes a reality, the Russian company will be in charge of a complete series of services, from attracting tourists in Russia and taking them to Vietnam to allocating accommodations and organizing travel packages for them in the Southeast Asian country.

Few Vietnamese firms will be able to join in the chain, except for providing food and other local transportation services, Saigon Tiep Thi reported.

Most Pegas Touristik customers choose to visit Nha Trang, a famed resort city in the south-central province of Khanh Hoa.

A Vietnam trip for these Russian tourists usually lasts 12 days and they mostly stay at three- to five-star hotels, according to The Saigon Times Online.

It took Pegas Touristik only four years to go from a Russian partner of local firms to a strong competitor with a huge presence in the Vietnamese tourism market.

But such a development path is now a trend among major multinational firms, according to experts with knowledge of the matter.

These foreign companies will at first cooperate with local partners to get to know the market.

Once they are accustomed to the market, the foreign players will set up subsidiaries to cater to their own customers instead of using domestic service providers.

Vietnamese businesses say they will face difficulty in competing with these strong multinational competitors.

Local tourism firms must acknowledge the risk of losing on home soil, and prepare to deal with the tough game now, according to some businesses.

The director of a major Vietnamese travel firm said even though local businesses have to “fight against the giants,” there are still ways to survive the tough game.

“Local firms today have to compete not only with each other, but also with multinational rivals on home turf,” he told Saigon Tiep Thi.

“But Vietnamese players still have advantages in this new kind of competition, if they manage to perfect service quality.”

The director said Vietnamese firms must prove that they are “the best service providers” in their locales.

“We must show foreign firms that it is better to use our services, instead of spending money setting up their own subsidiaries,” he said.

“Local firms must shake hands with each other to provide the best service at the most reasonable price, as this is the only way they can they survive the battle with the giants.”

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