The Indonesia-Vietnam market finally gets a nonstop service as VietJet prepares to launch Ho Chi Minh-Bali

VietJet has announced plans to launch services to Bali next month, providing the first nonstop link between Vietnam and Indonesia. The decision to make Bali its first Indonesian destination comes somewhat as a surprise as it reverses an earlier decision to launch services to the capital Jakarta.


Highlights:

  • VietJet is planning to launch five weekly flights from Ho Chi Minh to Bali at the end of May;
  • The new service will mark the first time Indonesia and Vietnam have been connected with nonstop flights;
  • VietJet previously announced plans to serve Jakarta but never followed through and the switch to Bali is sensible given its leisure focus.

The Vietnamese low cost airline announced on 12-Apr-2019 the launch of five weekly flights between Ho Chi Minh and Bali from 29-May-2019. VietJet kickstarted sales by offering for three days (17, 18 and 19 April) promotional tickets at USD0 excluding taxes for travel the last six and a half months of this year.

VietJet has been looking the last few years at adding Indonesia to its fast-expanding international network. In Aug-2017 at a high-profile event in Jakarta attended by several VIPs it unveiled plans to launch flights from Ho Chi Minh to Jakarta. It even set a launch date of 20-Dec-2017 for what was promised as a daily flight.

However, VietJet never launched Jakarta and it is unclear if the airline will relook at its Jakarta plans one Bali is launched. VietJet has a track record of announcing new international destinations and not following through – for example Brisbane, Delhi and Vladivostok.

Securing slots at Soekarno–Hatta International airport in Jakarta can be challenging but the initially announced schedule, arriving in Jakarta at 11:40pm and a taking off at 01:40am, should be feasible. Most likely VietJet scrapped Jakarta plans for commercial reasons and believes Bali is more suitable given its low-cost leisure focused model.

Bali is by far the most popular tourist destination in Indonesia. The Bali market consists almost entirely of inbound leisure traffic; there is very limited outbound demand and limited business traffic. In contrast, Jakarta is a huge outbound market and has significant business traffic. As VietJet is an unknown brand in Indonesia it makes sense for the airline to initially pursue an inbound leisure market. Distribution in Indonesia can also be challenging for a newcomer.

Vietnamese visitor numbers to Indonesia are low and Vietnam does not even make the top 20 source markets for Indonesia’s growing tourism industry. However, the launch of a direct flight to Bali from Vietnam’s largest city should stimulate demand, particularly among Vietnam’s expanding middle class. VietJet is also able to offer connections from smaller cities throughout Vietnam and from North Asia, which is a huge source market for Bali.

Indonesia and Vietnam are the largest and third largest countries in Southeast Asia, with populations of around 264 million and 96 million respectively. Surprisingly these two powerhouses are not currently connected with any direct air services.

Indonesia’s two largest airlines, Garuda and Lion Air, both previously served Ho Chi Minh but only via Singapore, where they were able to leverage fifth freedom rights in the much larger Singapore-Vietnam market. Vietnam Airlines has never served Indonesia although it has considered Indonesia and could be the better option for the business focused Ho Chi Minh-Jakarta route given its full-service position.

The success of Ho Chi Minh-Bali is hardly guaranteed. However, VietJet clearly sees an opportunity and is keen to become the first nonstop operator before a competing airline makes a move.