Vietnam’s aircraft orders are soaring. Now it wants the financing at home

[HO CHI MINH CITY] Even as geopolitical tensions in the Middle East disrupt global air routes and push up fuel costs, Vietnam’s carriers are looking past the turbulence towards a bigger, longer-term goal.

At an industry emergency meeting held on Monday (Mar 9), Vietnam Airlines deputy general director Nguyen Quang Trung said that the disruption could create an opportunity.

With Gulf carriers forced to scale back operations and recovery likely to take time, Vietnamese airlines could capture more transit traffic and move closer to the country’s longstanding ambition of becoming a regional aviation hub, he noted.

The flag carrier has already added about 30 extra flights on European routes to help stranded passengers – a sign of how Vietnam’s airlines are positioning themselves to take advantage of shifting aviation flows.

Behind that near-term response lies a much larger bet. There has been a wave of aircraft orders worth tens of billions of dollars that is reshaping Vietnam’s aviation industry – and driving plans to build a regional aviation finance ecosystem at home to support it.

Around 700 aircraft on order

Vietnam’s airlines have placed some of the largest aircraft orders in South-east Asia in recent years, reflecting expectations of sustained growth in passenger traffic. 

Ordering in bulk typically helps airlines secure favourable pricing and guaranteed delivery slots over the next decade from original equipment manufacturers such as Boeing and Airbus.

The largest deals are by Vietjet, Vietnam’s biggest airline by passengers carried. The budget carrier has nearly 600 aircraft on order, including a US$32 billion agreement for 200 Boeing jets, to expand its international network and modernise its fleet. 

Vietnam Airlines has also committed to 50 Boeing 737-8 MAX aircraft in an US$8 billion deal announced in February, its first purchase of Boeing narrow-body jets, with deliveries scheduled between 2030 and 2032.

Other newer carriers are also ramping up. Sun PhuQuoc Airways recently ordered 40 Boeing 787-9 Dreamliners for long-haul operations in a deal worth US$22.5 billion, while Bamboo Airways has resumed strategic cooperation with partners for new aircraft purchases following restructuring.

Truong Bui, partner and head of the transportation practice in South-east Asia at global consultancy Roland Berger, said that structural shifts in consumer purchasing power are reshaping travel demand in Vietnam, which is, in turn, driving airlines’ strong demand for fleet expansion.

“As incomes rise, air travel becomes both more frequent and more discretionary,” Bui said, noting that the country’s middle-high and above income cohort is projected to grow 2.5 times by 2035, while the number of high-income households could rise four times.

In its 2025 Commercial Market Outlook, Boeing forecast Vietnam as South-east Asia’s fastest-growing aviation market, with annual passenger traffic expected to rise 8.1 per cent between 2025 and 2030.

Last year, the country’s aviation sector, with 262 registered aircraft, handled a record 83.5 million passengers, up 10.7 per cent from 2024, including 46.6 million international travellers, according to the Civil Aviation Authority of Vietnam.

Meanwhile, its aviation capacity is also being robustly expanded through major upgrades at the country’s largest airports, Noi Bai and Tan Son Nhat, as well as the development of large-scale ones such as Long Thanh in the south and Gia Binh in the north. 

“The multi-year delivery horizon (of aircraft) aligns with a parallel build-out of enabling infrastructure… which, in turn, makes long-term fleet growth more feasible and economically rational,” Bui added. 

Richard Williams, partner at London-headquartered law firm Watson Farley & Williams, highlighted that aircraft orders themselves can also spur demand.

“If you have more aircraft, you can get more tourists in,” he pointed out. “I believe there’ll be lots of investment in Vietnam that will come because of those aircraft orders.”

Financing a multibillion-dollar fleet

The scale of these orders underscores the enormous financing needs facing the industry.

Commercial aircraft typically cost between US$50 million and US$250 million each, depending on the model. This means that airlines rarely pay for them outright. 

“The capital expenditure required to absorb hundreds of new aircraft is simply too massive for the balance sheets of domestic airlines,” noted Nguyen Minh Hoang, founder and managing partner at Ho Chi Minh City-based Harley Miller Law Firm. 

Purchases are typically structured through sale-and-leaseback arrangements, export credit agency-backed financing, and syndicated bank loans, he added.

In sale-and-leaseback deals, for example, airlines sell newly delivered aircraft to a lessor and immediately lease them back, freeing up working capital and transferring residual value risks.

Leasing currently dominates the industry: More than 70 per cent of aircraft operating in Vietnam are leased from international lessors. 

Williams noted that low-cost carriers favour operating leases – effectively renting aircraft from lessors – to run newer, fuel-efficient jets without tying up capital, while finance leases or other debt structures give airlines greater control over the asset and can lead to ownership at the end of the term.

“Lots of low-cost airlines, as they become more mature and want to attract investors to grow, evolve from just operating leasing to more finance leasing to improve the balance sheet,” he said.

He believes that with hundreds of aircraft on order, Vietnamese carriers “will get bigger” and must tap multiple financial sources globally. 

“The domestic financial markets will be quite important in that process,” Williams added, noting that many international financiers are keen to team up with domestic banks, at least in their first few transactions, to leverage domestic expertise and market knowledge.

Vietjet has signed aircraft financing agreements with a range of global lenders and lessors over the years, including Griffin Global Asset Management, AV AirFinance, Natixis, BNP Paribas and Carlyle Aviation Partners, to secure funding for fleet expansion.

Meanwhile, state-owned lender Vietcombank has also helped finance aircraft purchases by several Vietnamese airlines, including arranging funding for Vietnam Airlines’ acquisition of 50 narrow-body aircraft and Sun PhuQuoc Airways’ purchase of 10 aircraft.

Bringing aviation finance home

Today, most high-value transactions linked to Vietnam’s aviation sector – including aircraft leasing, insurance and fuel hedging – are still handled through established international hubs such as Singapore, Hong Kong, Dublin and Dubai.

Vietnam hopes to capture more of that activity domestically.

In February, Vietjet launched the Asia-Pacific Aviation Financial Hub (AAFH) within the Vietnam International Financial Centre in Ho Chi Minh City (VIFC-HCMC), aiming to create a “one-stop, multi-service” hub connecting finance, airport infrastructure, maintenance, repair and overhaul services, as well as logistics.

Dr Nguyen Huu Huan, vice-chairman of the executive board of the VIFC-HCMC, said aviation finance represents a “strategic niche” that Vietnam could develop.

“Instead of competing directly with major financial centres across all sectors, Vietnam can focus on areas closely linked to its real economy,” he stated, pointing to aviation as a fast-growing industry tied to the country’s booming tourism and export-oriented manufacturing, as well as its strategic location along major air routes connecting North-east Asia, South-east Asia and Oceania.

“One of the key objectives is to create a financial environment that is open and flexible enough for international aviation financial transactions to be conducted directly in Vietnam,” Dr Huan added.

Yet, legal frameworks remain a work in progress. Vietjet’s high-profile leasing disputes – especially with British lessor FW Aviation – have drawn attention to Vietnam’s implementation of the Cape Town Convention, which is meant to allow aircraft repossession in cases of missed payments. This has raised concerns among lenders about enforcement risks in the country.

“If you provide a helpful regime that international creditors can rely on, your domestic companies can get cheaper finance,” said Williams, stressing that global financiers and lessors need “a clear, consistently enforced legal framework” to confidently conduct aircraft financing and leasing domestically.

However, he said that while those disputes need to be resolved, they are unlikely to materially affect interest in Vietnam, given the country’s growth prospects and the ample liquidity in global financial markets.

Besides regulatory certainty, experts note that the AAFH’s success will also depend on its capability to enable friction-free cross-border capital flows, liberalised foreign exchange, competitive tax structures, and the development of a full ecosystem including airport infrastructure, maintenance facilities and skilled labour.

“(The AAFH) is not an overnight thing. Establishing the concept itself is just the first step,” Williams added. “Creating the enthusiasm (domestically and internationally) among people with the skills to come and work in this place… that’s going to be key to its success.”