Vietnamese conglomerate Vingroup has abandoned plans to establish an airline known as Vinpearl Air, citing a desire to focus on its core strengths and a potential oversupply in the aviation market.

The group says it has applied to Vietnam’s transport ministry to officially withdraw its plans.

“Vietnam’s aviation market has potential and is developing strongly, but there are also [many] large companies [involved],” says vice-chairman Nguyen Viet Quang.

“Vingroup’s strong investment in aviation can lead to oversupply, cause waste to society, and we also need to focus resources for developing our technology [and] industry segment.”

Vingroup’s focus is on the technology, industry and services segments. It also has presence in the ares of property, tourism and hospitality, retail, and education.

The group stresses that this will not affect the VinAviation pilot training school it established in partnership with flight training provider CAE in 2019.

According to Cirium data, Vingroup announced its plans for Vinpearl, which was to be based in Hanoi, in July 2019. Founding shareholders are VinAsia Tourism Development with a majority 45% stake, along with entrepreneurs Hoang Quoc Thuy and Pham Khac Phuong, holding 30% and 25%, respectively.

Demand for air travel has grown rapidly in Vietnam, on the back of a booming middle class. Cirium schedules data shows there are currently four Vietnamese airlines. Vietnam Airlines is the largest operator, accounting for at least 28% of all seats on flights into Vietnam. Low-cost operator VietJet Air supplies 25% of total capacity, while smaller players Jetstar Pacific and Bamboo Airways have about 10% and 5% market share, respectively. The remaining capacity is filled by foreign carriers.