IPP Air Cargo logo on a refitted airplane for cargo. — Photo IPP Air Cargo

IPP Air Cargo, in an unanticipated move, has withdrawn its application for a cargo flight permit, citing “worsening economic conditions”, “looming global recession” and “volatile fuel prices”, all of which likely will result in numerous challenges for global freighters.

 “We will consider our position and reapply once the global market recovers and shows signs of stability,” said IPP CEO Lê Hồng Thủy Tiên in a company statement.

Earlier in January, IPP Air Cargo filed for a cargo flight permit with a project to invest VNĐ2,400 billion ($96.5 million) with 30 per cent of the initial investment from the company. The company said it had plans to operate five cargo planes during the project’s first year, seven in the second and 10 in its third.

The company’s business plan said the company could haul up to 115,000 tonnes of goods during the first year with an estimated revenue of $71 million. The company expected a profit return starting from its fourth year.

According to the Civil Aviation Authority of Vietnam (CAAV), in a preparatory move, the company signed a Memorandum of Understanding with Boeing to purchase 10 B777F airplanes. In addition, the air freighter signed a Letter of Intention with BBAM, an airplane lease and management company based in San Francisco, US, to rent four B737- 800BCF airplanes. To date, one of which was refitted for cargo and repainted with IPP Air Cargo's logo.

All IPP Air Cargo’s registered airplanes were considered fit for service and the company met all requirements under current regulations, said CAAV.

There are five airlines registered to haul cargo with passenger airplanes in Việt Nam. The Southeast Asian country has not yet granted a cargo flight-only permit.

The mentioned-above airlines accounted for 18 per cent of international air cargo in Việt Nam in 2019, dropping to 11 per cent in the 2020-21 period. The rest of the market share was divided among 29 foreign airlines operating in the country.

In an interview published on the company’s website, IPP Air Cargo’s Chairman Jonathan Hanh Nguyen said air freight prices, during the peak of the pandemic, went up significantly, as much as five times on several occasions.

Nguyen said with 88 per cent of the market share in the hands of foreign air freighters, “the demand for air freight will remain congested, and price volatility will make it tough for domestic export-import businesses.” — VNS