News / IPP beats competition to launch Vietnam's first all-cargo airline

Vietnam’s first all-cargo airline is about to receive its first freighter and could start operations next month.

IPP Air Cargosaid its first 737-800BCF was “nearly done” after  conversion at Guangzhou Aircraft Maintenance Engineering in China, where it has a second aircraft undergoing conversion and two more on the way.

The airline was set up last year by billionaire Johnathan Hanh Nguyen, chairman of Imex Pan Pacific Group (IPP), a conglomerate specialising in luxury brand distribution and retail.

At the time, Mr Nguyen said he was motivatedby Vietnam’s airfreight rates increasing by up to five times during the Covid-crisis and the fact that around 80% of the country’s air cargo is controlled by foreign carriers.

He added: “Vietnam lacks a specialised airline that transports goods. Exporting businesses are facing serious difficulties. Businesses are willing to pay premium rates, but they must occasionally wait in line for flights because the airline does not have enough slots.”

With $100m in funding, IPP plans to lift 115,000 tonnes of cargo a year, initially launching domestic routes, followed by services to Singapore and Hong Kong as its first international connections.

And cargo flights to Australia could soon follow. IPP has been setting up a partnership with Australia’s Wagner Group to launch a direct freight route between Toowoomba Wellcamp Airport in Queensland and Cam Ranh Airport, close to Nha Trang in South Vietnam.

The two companies said the route would boost the trade of Aussie beef and other agricultural products, which could get from “farm-to-table in 72 to 86 hours.”

With IPP’s first freighter delivery imminent, the start-up airline has pipped established Vietnamese carriers to operating all-cargo aircraft, particularly Vietjet, which has long had ambitions to become a freighter airline. Vietjet operated passenger freighters during the pandemic, and announced again last month its intention to introduce freighters.

Likewise, Vietnam Airlines is reportedly set to create a freighter division, and this month, Air Transport Services Group announced it was buying two A321 narrowbody jets from the carrier, which it would lease back after freighter conversion.

According to Vietnam’s Civil Aviation Administration, the country’s total air cargo volumes increased by 6.8% in the first half, to 651,000 tonnes, out of which 504,100 tonnes was international.

The shift of electronics manufacturing to Vietnam could help boost air cargo volumes further. For example, the Apple Watch and MacBook are the latest mass-market gadgets to be produced in the country, according to Nikkei Asia, which said Apple was keen to diversify its China-dominated supply chains.

Wondering how ocean freight rate increases are driving inflation? Shipping investor, author, operator and analyst John McCown explains on this clip from the August Loadstar Podcast, published today. Click here to listen