Vietjet: The Low-Cost Airline That Beat the Flag Carrier

Vietjet is what happens when a low-cost airline playbook meets a country of 100 million people who had almost never flown. When Nguyễn Thị Phương Thảo’s carrier operated its first flight between Hồ Chí Minh City and Hà Nội on Christmas Eve 2011, Vietnam Airlines and its budget affiliate carried nearly every passenger in the country. Within seven years Vietjet had more domestic passengers than the flag carrier, a listing on the Hồ Chí Minh City stock exchange and headline orders for hundreds of Airbus and Boeing jets. This article traces how that happened, what the numbers really say about the model, and where the risks now sit. It is part of the Vietnam Company Stories hub.

Why did a Vietnamese low-cost airline take so long to appear?

Because until the late 2000s the state simply did not license one. Vietnam Airlines, wholly owned by the government, and its Jetstar Pacific affiliate, in which Qantas had bought a minority stake in 2007, were the only serious scheduled carriers. Private applicants such as Indochina Airlines and Air Mekong received licences but collapsed within a couple of years.

Vietjet Aviation Joint Stock Company was granted its licence in November 2007, the first fully private Vietnamese airline permitted to operate domestic and international routes. It then spent four years not flying. The 2008 fuel spike and financial crisis, plus a short-lived tie-up with AirAsia that regulators refused to approve in 2010, delayed the launch. The Malaysian group walked away; Sovico Holdings, the investment vehicle of Thảo and her husband Nguyễn Thanh Hùng, kept the licence and the plan.

That delay turned out to be useful. By the time the first A320 departed Tân Sơn Nhất in December 2011, Vietnam’s per-capita income had passed roughly US$1,500, the highway and rail alternatives between Hà Nội and Hồ Chí Minh City still took 30 hours or more, and the domestic market was effectively a duopoly with fares set by a state company that had never needed to fight for a customer. The gap between what flying cost and what the median household could pay was where Vietjet built its business.

The founder’s background matters here. Thảo had made her first fortune trading goods between Vietnam and the former Soviet Union while a student in Moscow, then moved into banking and real estate at home. She approached aviation as a distribution problem, not an aviation problem, which is the trait the more detailed profile of Nguyễn Thị Phương Thảo on this site explores in depth.

How does the Vietjet business model actually work?

It is a textbook low-cost carrier: a single Airbus A320-family fleet, high daily aircraft utilisation of around 12 to 14 hours, dense single-class cabins, rapid turnarounds, direct online distribution and fares unbundled so that almost every comfort is sold separately. What Vietjet added was aggressive promotional pricing, sometimes at zero dong plus taxes, to manufacture demand from people who had never bought an air ticket.

The cost side is disciplined in the way Ryanair and AirAsia are disciplined. The company reports cost per available seat kilometre, excluding fuel, on the order of 2 US cents in normal years, which is among the lowest in the world. Cabin crew are young and inexpensive, maintenance is outsourced or done in-house at scale, and the aircraft are new, which keeps fuel burn and repair bills down. The famous bikini-clad flight attendant photo shoots were a marketing expense that bought years of free coverage.

The revenue side is where the model is distinctive. Ancillary revenue, meaning everything other than the base fare, has run at roughly 30 to 40 percent of passenger revenue in the airline’s own disclosures, one of the highest ratios among Asian carriers. Checked baggage, seat selection, hot meals, priority boarding, travel insurance and a co-branded credit card with HDBank, the bank Thảo also controls, all feed that line.

The third leg is aircraft trading. Vietjet places very large orders with Airbus at deep discounts, takes delivery, sells the aircraft to a leasing company at a price above its own discounted cost, and leases it back. The gain is booked as income in the year of delivery. In several pre-pandemic years, gains from these transactions accounted for a large share of consolidated pre-tax profit. It is legal, common in the industry and disclosed, but it means Vietjet’s profits move with its delivery schedule as much as with its load factors.

When did Vietjet overtake the flag carrier, and what did that look like?

On domestic passenger numbers the crossover happened around 2017 to 2018, when Vietjet’s share of the home market passed roughly 40 percent while Vietnam Airlines, excluding its affiliates, slipped below it. By 2019 Vietjet was carrying on the order of 25 million passengers a year on more than 130 routes with a fleet of around 75 aircraft.

The growth curve is remarkable even by Asian low-cost standards. Passengers went from roughly a million in 2012 to about 9 million in 2015 and past 23 million in 2018. The domestic market itself grew at double-digit rates most of those years, so Vietjet was not only taking share, it was expanding the pie: bus and train passengers on the north–south corridor became first-time flyers, and the airline’s pricing kept the conversion going.

The February 2017 listing on the Hồ Chí Minh City Stock Exchange under the ticker VJC put a market price on the achievement. The offering valued the company at roughly US$1.4 billion and made Thảo Vietnam’s first self-made female billionaire on the Forbes list. Within a year the shares had roughly doubled and Vietjet’s market capitalisation exceeded that of the flag carrier, which was preparing its own move to the main board. The story of how the market later treated both airlines is one thread in the wider piece on Vietnam’s long road to an emerging-market upgrade.

The flag carrier’s response was slow and defensive. It leaned on Jetstar Pacific, later renamed Pacific Airlines, to fight on price, but that unit lost money for years. Vietnam Airlines itself moved upmarket, bought Boeing 787s and Airbus A350s, and chased a four-star Skytrax rating. The two companies effectively agreed to occupy different ends of the market, an arrangement examined in the companion article on Vietnam Airlines and its state rescue.

How did Vietjet fund one of the largest order books in Asia?

By ordering far more aircraft than it needed and using the order book itself as a financing tool. Since 2014 Vietjet has signed agreements for well over 300 Airbus A320-family jets, 200 Boeing 737 MAX aircraft and, from 2024, 20 Airbus A330neo widebodies, with list values running into the tens of billions of dollars.

The mechanism is the sale-and-leaseback described above. Because Vietjet negotiates as a large, repeat buyer, its unit price is well below list. When each aircraft arrives, a lessor such as Avolon, BOC Aviation or Carlyle Aviation pays close to market value and Vietjet books the difference. The airline then pays monthly rent, which is an operating cost rather than a capital outlay. Vietjet has, as a result, never needed to raise the equity or take on the secured debt that owning a 100-aircraft fleet would imply.

The Boeing order deserves its own note. First signed as a 100-aircraft deal in 2016 during President Obama’s visit to Hà Nội, then doubled to 200 in 2019 during the Trump–Kim summit in the same city, it was for years widely regarded as a diplomatic gesture rather than a fleet plan. Vietjet had no 737 pilots, no 737 maintenance and an all-Airbus operation. Deliveries kept slipping, first because of the MAX grounding and then because the airline appeared in no hurry. Only in 2024 and 2025 did the two sides confirm a schedule, with deliveries expected from the second half of the decade and an option to place some of the aircraft with Vietjet’s affiliates in Thailand and elsewhere.

At the Paris Air Show in June 2025 Vietjet added a firm order for 100 more A321neo aircraft, with options for a further 50, and in the same period discussed A330neo widebodies for Australia, Kazakhstan and long-haul India routes. The critical question for investors is not whether these aircraft are needed in aggregate, since Vietnam’s market keeps growing, but whether the delivery cadence and leaseback gains can be sustained when Airbus is years behind on production and lessors are less generous than they were in 2018.

What happened to Vietjet during and after the pandemic?

Vietnam closed its borders in March 2020 and grounded most domestic flying during the long 2021 lockdowns, and Vietjet lost money in 2020, 2021 and 2022 before returning to profit in 2023. Consolidated losses in 2022 were on the order of VND 2 trillion, driven by fuel prices, a weak dong and the cost of restarting a fleet that had been parked.

The airline survived the closure better than its state rival because it had less debt, a younger fleet and a more flexible cost base. It converted passenger aircraft to carry cargo, sold and leased back planes to raise cash, deferred deliveries and negotiated with lessors. Unlike Vietnam Airlines it did not receive a National Assembly rescue package; it did benefit from the industry-wide fuel tax cuts and the deferral of landing and navigation fees that the government extended to all carriers.

Recovery from 2023 was fast on the domestic side and slower internationally, because Chinese tourists returned late. Vietjet responded by opening routes it had never flown before: Australia from 2023, with Sydney, Melbourne, Brisbane and Perth served from Hồ Chí Minh City and Hà Nội, a dense Indian network, Kazakhstan, and more Japan and Korea capacity. By 2024 international passengers exceeded domestic for the first time, and consolidated revenue reached roughly VND 72 trillion, or about US$2.9 billion, with an after-tax profit of around VND 1.4 trillion.

The 2024 and 2025 results also show a new feature: Vietjet is no longer only a domestic price warrior. Its yields on international routes are higher, its widebody ambitions are real, and it has taken a controlling stake in the small carrier Vietravel Airlines, giving it a second operating certificate and slot portfolio. Whether it can run a multi-brand, multi-fleet operation with the same cost discipline is the question the next decade will answer.

Why did Vietjet lose a US$180 million case in London?

Because it stopped paying rent on four Airbus A321s during the pandemic, the lessor FitzWalter Capital terminated the leases and sued in the English courts, and the judge found that Vietjet had breached its contracts and then obstructed the recovery of the aircraft. The High Court ruled against the airline in 2024 and the Court of Appeal upheld the decision in 2025.

The facts, as set out in the judgments, are unflattering. The aircraft had been leased in 2015 from a BNP Paribas-arranged structure; the leases were sold to FitzWalter, a distressed-debt investor, in 2021 when Vietjet was in default. FitzWalter terminated and demanded the planes back. Vietjet, which had the aircraft registered in Vietnam, did not return them for many months and, in the court’s view, used the Vietnamese registration and administrative processes to slow deregistration. Damages plus interest and costs reached on the order of US$180 million to US$200 million.

The commercial lesson was noticed across the leasing industry. Vietnam had not yet fully implemented the Cape Town Convention remedies that give lessors quick repossession, and lessors priced that risk into every Vietnamese deal. Vietjet’s public stance, that it had negotiated in good faith and been targeted by an opportunistic fund, did not persuade the London judges. The case also fed into the difficulty its rival Bamboo Airways had returning leased aircraft during its own collapse, described in the article on the Bamboo Airways collapse.

The financial impact was manageable for a company with Vietjet’s revenue base, but the reputational cost with the lessor community, which supplies almost its entire fleet, was not trivial. The airline has since made a point of settling other disputes quickly and of stressing its on-time rent record with major lessors.

What does the Vietjet story mean for founders, investors and operators?

The central lesson is that an underpriced, state-dominated market can be taken by a private entrant with a proven foreign playbook and a domestic owner who understands the regulator. Vietjet copied AirAsia and Ryanair on cost and unbundling; it did not copy their politics. It built relationships in Hà Nội, hired former officials and made itself part of the national story of a country that flies.

For investors the lesson is about accounting literacy. A rapidly growing airline with large orders will show earnings that include aircraft gains, and its equity valuation will reflect a delivery pipeline as much as a route network. That is not a fraud; it is a feature. But it means that the moment the pipeline slows, as happened in 2020 and again with the engine groundings in 2024, reported profits fall faster than passenger traffic does.

For operators in other sectors, the ancillary revenue model is transferable. Vietjet sells the base product at or near cost and monetises everything around it: bags, seats, food, insurance, payments, loyalty and now a bank card. Vietnamese retailers, ride-hailing platforms and telecoms have all borrowed the idea. The key is a customer base large enough that even small attachment rates produce significant revenue, and a data system that knows what to offer at which moment.

The final lesson is about founder concentration. Vietjet, HDBank, Sovico and a portfolio of property and energy interests all sit under one family. That structure produced speed and cheap financing in the growth years; it also creates related-party exposure and succession questions that public shareholders must price. Thảo moved from chief executive to chairwoman in 2023 and installed a professional CEO, Đinh Việt Phương, but strategic control has not changed hands.

Can Vietjet keep growing without the domestic price war?

Probably, but the growth will come from different places. Domestic Vietnam is now a mature three-airline market with Bamboo Airways shrunk, Pacific Airlines reset and fuel-tax relief phasing out; the next 20 million passengers will be international, particularly from India, Australia, Korea, Japan and, if visa policy cooperates, China.

Vietjet’s international bet rests on three things. First, geography: Vietnam is a five-hour flight from most of Asia and a plausible connecting point between India and Australia. Second, the widebody order, which allows non-stop flights to Australian cities and Central Asia that a narrowbody cannot serve economically. Third, its affiliate model: Thai Vietjet has operated since 2014, a Kazakh joint venture was announced in 2025, and the Boeing order includes aircraft that could be placed with partners rather than the parent.

The infrastructure constraint is real. Tân Sơn Nhất is saturated, the new Terminal 3 helped domestic congestion but not international slots, and the long-delayed Long Thành airport will only begin to relieve the southern hub as it opens in phases. Vietjet has argued publicly for a second-airport strategy that keeps its domestic operation at Tân Sơn Nhất while international flights move, which would, conveniently, raise its rivals’ costs more than its own.

The airline enters its second decade as a public company with a fleet of roughly 100 aircraft, a network that reaches from Perth to Almaty, and a founder who now controls a bank, an airline and a widening set of energy and property assets. It has beaten the flag carrier on the metric that mattered to it, which was passengers. Whether it can beat it on the metrics that will matter next, which are yield, network quality and balance-sheet resilience, is not yet settled.

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