Vietnam Airlines saw a 2.6 percentage point decline in its market share over a six-month period ending last May as two private airlines Air Mekong and VietJetAir vie to expand.
Vietnam Airlines' domestic market share dropped from 77 percent in late 2011 to 74.4 percent in May this year. It is expected to slip another 1.8 percent to 72.6 percent by the year-end, Dau Tu Newspaper reported.
A report by the state-owned carrier showed that the loss to VietJetAir was due to increased competition from the budget carrier on the two popular Hanoi-HCMC and HCMC-Da Nang routes.
Lai Xuan Thanh, deputy head of Civil Aviation Authority of Vietnam, said: "The new carriers have put Vietnam Airlines under pressure, even though the national carrier has a big advantage in full logistics support services."
Local media in early August reported Vietnam Airlines was seeking permission from the Ministry of Transport to make an 80 percent reduction of its profit target this year since its total revenue in the first five months was only equal to 38.7 percent of the original plan.
Air Mekong entered Vietnam's aviation market in October 2010 and has since offered 20,000 flights that have transported over 1.3 million passengers.
The private airline will add two Airbus A320 aircraft by December to its current fleet of four 90-passenger CRJ900s. An Airbus A320 can carry a total of 180 passengers and has been used by its rivals Vietnam Airlines and VietJetAir.
VietJetAir has been open for business since late last year, four years after receiving a license as the first private carrier in the country. It has made 360 flights with more than 40,000 passengers as of late February, only two months after its first flight.
The no-frills carrier is now flying with three Airbus A320 and planning for a fleet of 15-20 aircraft by 2015.
Statistics show Vietnam Airlines now flies 36 domestic routes to key destinations in the country, while the domestic air routes of Air Mekong and VietJetAir are 13 and 5 respectively.
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