At the Dubai Air Show in early November, budget carrier VietJet signed an agreement with Airbus to buy 30 A321 aircraft worth $3.6 billion at list prices.

The deal is for nine A321 ceo and 21 A321neo aircraft.

Last year at the Singapore Airshow VietJet had signed a contract to buy and lease 100 aircrafts from Airbus.

In July this year Vietnam Airlines signed a $1.55 billion deal to buy eight Boeing Dreamliner aircraft.

According to VNA, the carrier has so far this year spent more than VND21.2 trillion to upgrade its fleet.

Jestar Pacific said it had already bought two more Airbus A320s, increasing its fleet size to 11.

Independent observers consider the huge investments by the airlines as a good sign indicating that the aviation industry is developing robustly.

Despite competition that is becoming fiercer, the market still holds great potential, particularly for private investors, since it is expected to grow by 7.3 per cent per year in the next 20 years, the highest in the Asia Pacific region, according to the International Air Transport Association (IATA).

Being aware of this potential, airlines have in recent years actively sought ways to expand market share.

Most have given priority to upgrading fleets with new modern aircraft and improving the skills of their air crews.

Carriers are also busy expanding into new sectors.

Jestar Pacific this year started operating on three new domestic routes. VietJet recently launched three new routes. In November Vietnam Airlines began flying on the Hai Phong-Nha Trang sector.

Besides upgrading their technical infrastructure, airlines are also focusing on improving the quality of their services and offering reasonable prices.

Vietnam Airlines has tried to burnish its image by changing its crews' uniforms, repainting aircraft and trying to improve its employees' attitudes towards passengers.

It has set itself an ambitious goal of achieving SkyTrax's four- or five-star rating.

It has also tried to lower ticket prices, bringing down the ceiling price of tickets by 4 per cent from earlier.

VietJet's fares have come down by 27 per cent since June-July and the airline has been actively trying to improve the quality of services like ticketing.

Since May Jetstar Pacific has been implementing a programme to provide satisfactory services to customers.

The airlines' efforts seem to be paying off. In the first 10 months of this year Vietnam Airlines saw passenger numbers increase by 9.3 per cent to 14.6 million. Jetstar Pacific reported a 54.5 per cent rise to 3.2 million and VietJet Air, a 66 per cent rise to 7.4 million.

The fourth carrier, Vasco, registered an increase of 44 per cent.

But analysts point to domestic airlines' failure to address the cargo market as a result of which none of them have fleets specialising in carrying cargo, a highly lucrative segment, estimated at US$2 billion by the Vietnam Logistics Association.