IPP Air Cargo will soon be in the air

Phillip Nguyen, CEO of IPP Travel Retail, speaking at the Routes Asia conference in June this year, stated that the new airline, branded IPP Air Cargo, will begin operations in September 2022, first servicing Hong Kong and Singapore.

In June 2021, IPP Group announced the acquisition of IPP Air Cargo
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In June 2021, IPP Group announced the acquisition of IPP Air Cargo

IPP Air Cargo's first 737-800 BCF aircraft is nearing completion at Guangzhou Aircraft Maintenance Engineering Co., Ltd. (GAMECO), announced Brian Thomas Hogan, Leasing Advisor at IPP Air Cargo, on LinkedIn. The second aircraft is already in conversion, followed by the third and fourth.

IPP Group (IPPG), a Vietnamese retail group that established IPP Air Cargo in June 2021 was hoping to receive its first modified aircraft to be delivered by the end of July 2022. Phillip Nguyen, CEO of IPP Travel Retail, speaking at the Routes Asia conference in June this year, stated that the new airline, branded IPP Air Cargo, will begin operations in September 2022, first servicing Hong Kong and Singapore.

What is the story of IPP Air Cargo's acquisition?

In June 2021, IPP Group announced the acquisition of IPP Air Cargo. With a VND 2,400 billion (US$ 100 million) investment, IPP Air Cargo was formed to start an airline focused on freight transport, at a time when the sector was in chaos due to the pandemic.

In an interview published on IPP Group in June 2021, Johnathan Hanh Nguyen - Chairman of IPPG explained why he decided on establishing an airline when the world was in the middle of a crisis.

"Vietnam lacks a specialized airline that transports goods. Exporting businesses are facing serious difficulties. Businesses are willing to pay premium rates, but they must occasionally wait in line for flights because the airline does not have enough slots. Therefore, I immediately thought to myself, "I can't just sit here and sell branded products to make money.", even though branded goods sold extremely well during the pandemic season. Since the customers were unable to travel overseas, we imported the new models for them to purchase, resulting in an 84 percent increase in sales," said Nguyen.

IPP Air Cargo is managed by CEO Le Hong Thuy Tien, with former Polar Air Cargo COO Lars Winkelbauer serving as an advisor. The new airline is in negotiations with Singapore's postal service provider Singpost and Cainiao, the logistics subsidiary of Chinese e-commerce giant Alibaba.

IPPG has also signed a memorandum of understanding with Australia's Wagner Corporation to build a trade corridor between Toowoomba (WTB) in Queensland and Vietnam. Service is anticipated to begin in March 2023. According to Nguyen, the route's objective is to transport consumer and industrial goods to Australia, as well as perishables like fresh food to Vietnam and beyond. He also stated that plans are in the pipeline to use Da Nang (DAD) and Cam Ranh (CXR) as staging points for goods to be transported to other destinations in the area or to Vietnam's seaports.

What is the agenda of IPP Air Cargo with the new aircraft?

According to Nguyen's statement, IPP Air Cargo has been methodically preparing since January 2021. The airline plans to start domestic freight flights three months after receiving its pilot's license, followed by international flights.

"IPP Air Cargo will invest in a larger aircraft system as well as collaborate with other international airlines to transport commodities from overseas to Vietnam. Exporting vegetables, fresh food, and other essential import and export items will be carried directly at that time," said Nguyen.

"Honestly, foreign air cargo carriers are also ecstatic about this news since, according to the International Aviation Agreement, the number of domestic cargo aircraft going out will boost the number of incoming flights. When IPP Air Cargo enters this market, international airlines may lose around 38 percent of their market share (based on our calculations), but their cargo volume will grow by about 50 percent due to more flights."

IPP Air Cargo intends to operate 5 cargo aircraft in the first year, 7 aircraft in the second year, and 10 aircraft in the third year, according to the plan. The airline plans to start flying cargo as soon as possible and expects to be profitable in three years.

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