Vietnam overtakes Thailand as ASEAN’s second-largest aviation market
Vietnam has overtaken Thailand as Southeast Asia’s second-largest aviation market, while regional airline capacity fell 1.2% in July 2026.
Vietnam has overtaken Thailand to become Southeast Asia’s second-largest commercial aviation market, as overall airline seat capacity across the region declined in July 2026, according to UK-based aviation data provider OAG.
OAG reported that total airline capacity in Southeast Asia fell by 1.2% from July 2025 to 50.4 million seats in July 2026.
Domestic airline capacity declined by 1.3% and accounted for 45% of the region’s commercial aviation market, while international capacity fell by 1.5% and represented the remaining 55%.
The contraction was attributed to rising fuel costs driven by tensions in the Middle East, which prompted several Southeast Asian airlines to reduce international services.
Indonesia remains the region’s largest market
Indonesia retained its position as Southeast Asia’s largest commercial aviation market, with 10.9 million seats in July, up 0.3% from the same month last year.
Vietnam moved ahead of Thailand into second place after recording 7.4 million seats, an increase of 5.6% year on year.
Vietnam Airlines, the country’s national full-service carrier, also became the largest airline in Southeast Asia by seat capacity. It offered 2.81 million seats during the month, up 0.1% from July 2025.
Thailand, previously the region’s second-largest aviation market, fell to third place with 6.9 million seats, down 3% year on year.
Malaysia ranked fourth with 5.2 million seats, a decline of 8.3%, followed by the Philippines with 4.9 million seats, down 4.1%.
Middle East conflict weighs on regional capacity
OAG data showed that Thailand, Malaysia and the Philippines all recorded declines in commercial airline capacity.
The reductions were linked to disruption caused by the conflict between Iran and the United States, as well as renewed tensions surrounding the Strait of Hormuz.
Jet fuel prices rose sharply and remained elevated as the situation intensified, increasing operating costs for airlines.
As a result, several carriers reduced or suspended direct and connecting services between the Middle East and the three Southeast Asian countries.
ASEAN’s five largest aviation markets in July 2026
- Indonesia: 10.9 million seats, up 0.3%
- Vietnam: 7.4 million seats, up 5.6%
- Thailand: 6.9 million seats, down 3%
- Malaysia: 5.2 million seats, down 8.3%
- The Philippines: 4.9 million seats, down 4.1%
