Vietnam’s 1st Freight Carrier IPP Air Cargo Scraps Launch Plans

IPP Air Cargo was on-track to take-off in November, until it decided now was not the best time to enter the air cargo market.

Vietnam’s first cargo carrier, IPP Air Cargo, was initially looking to launch in November as it had begun building its fleet and had already received its Air Transport License. However, with November approaching, the cargo carrier has asked the Vietnamese government to end the process of licensing its application, scraping the launch indefinitely.

The take-off checklist was nearly complete

Owned by the Imex Pan Pacific Group and the company chairman’s family, IPP Air Cargo was slated to be the first cargo airline in Vietnam, anticipating approximately $71 million in revenue during its first year of operation. Before take-off, the airline had already signed shipment deals with several companies, including two of the world’s biggest chip manufacturers.

With its ATL in the bag, IPP Air Cargo was already beginning the rental process of receiving four Boeing 737-800BCF aircraft, and one was already delivered. The remaining three were scheduled to be delivered in December and April. And besides securing some narrowbody aircraft, the cargo carrier had also purchased 10 Boeing 777 freighters.

All that was left for IPP Air Cargo was the approval of several other permits from various organizations, including the more significant Air Operator Certificate. Confident in its progress, the cargo carrier initially stated that all the required permits would be ready by November, and it would launch its inaugural flight from Cat Bi Airport in the northern city of Hai Phong.

An aborted take-off

IPP Air Cargo seemed to be going along smoothly until the airline made the shocking decision to ask the government to end the process of approving its AOC. Without the AOC, the cargo airline cannot begin operations, so ending the approval process entirely means it would never take off. But why would the airline startup suddenly take such an unforeseen turn? The answer is a mix of poor management and forecasting.

Although the air cargo market has been blooming due to the pandemic and is forecasted to expand even more significantly post-pandemic, the current global conflicts and bad economic situations have caused air cargo demand to contract slightly. As crucial markets such as China remain closed off, the forecast is that the demand and supply chains will continue to suffer for the time being.

Several of the airline’s shareholders realized this and further discovered that air cargo rates would drop to affordable levels for better facilitation of international air cargo and trade. Given such circumstances, the shareholders acknowledged that if IPP Air Cargo was to launch in such unstable market conditions, it would cause more damage to cargo carriers already suffering losses.

The unknown fate of IPP Air Cargo

With take-off procedures aborted, where does that leave IPP Air Cargo? According to the company’s chairman, the idea of launching Vietnam’s first cargo carrier is not entirely scrapped, given how fruitful such a launch would be for the country. However, the airline will only resume and restart its launch at a more appropriate time when the global air cargo market recovers and becomes more balanced.

Source: Simple Flying