Vietnamese airlines excited, worried about direct US flights

By Dat Nguyen   February 12, 2019 | 05:00 pm PT
Vietnamese airlines excited, worried about direct US flights
Direct routes to the U.S. would be a new market for Vietnamese airlines. Photo by Reuters
Vietnamese carriers are keen on operating direct flights to the U.S., but worried about recouping the large investments involved.

The U.S. Federal Aviation Administration (FAA) is expected to grant a Category 1 rating to Vietnam soon, allowing direct flights between the two countries, Reuters reported earlier this month, citing two U.S. officials.

Dinh Viet Thang, head of the Civil Aviation Authority of Vietnam (CAAV), said that direct routes to the U.S. would be a new market that Vietnamese airlines won’t have to face with strong competition from other foreign carriers. He did not elaborate.

"Non-stop flights from Vietnam to the U.S. will be a brand-new market full of potential for local airlines, as no international airline has operated them so far," he told local media.

Local airlines are enthused about the possibility of operating direct routes. A Vietnam Airlines official who asked not be named said the carrier was considering the purchase of more airplanes which are capable of flying non-stop to the U.S.

"None of our airplanes can fly directly, so we are considering the purchase of wide-body aircrafts such as Airbus 350-1000 or Boeing 787-8 Dreamliner," the representative told VnExpress International.

Budget airline Vietjet and new private airline Bamboo Airways have also said they are interested in opening direct flights between the two countries.

The direct route is expected to cater to the large demand for travel between both countries. The number of tourists coming to Vietnam from the U.S. grew by 11.9 percent last year from 2017 to 687,000, according to the Ministry of Culture, Sports and Tourism.

A Vietnamese population of over 2.1 million in the U.S., is also expected to be a stable source of travel demand, said industry insiders.

Tourism companies are also having high hopes about prospects of direct flights. Nguyen Cong Hoan, vice general director of Hanoi Redtours, said that the number of customers travelling to the U.S. through his company has increased by 30 percent each year in the last few years.

"A direct flight will make travel between the two countries much easier and reduce the time passengers have to wait in airports. We believe that our customers are willing to pay 20-40 percent more for a direct flight," he told VnExpress International.

Breaking even

But there are also concerns about possible losses. Vietnam Airlines CEO Duong Tri Thanh had said earlier that the airline could face an average annual loss of $30 million in the first years of operation if it opens a direct route to the U.S.

It would take at least five years for the national flag carrier to break even, he added.

CAAV head Thang said that local airlines would need to purchase larger airplanes as most of the existing fleet cannot manage such long flights.

Another option would be to reduce the number of passengers and/or cargo weight of existing aircraft to guarantee safety over a 13-hour flight, but this would reduce revenue, he added.

The Vietnamese government had early last year approved plans to expand the network of national carriers to major markets including Australia, China, Europe and the U.S.

Under these plans, Vietnam Airlines will go through with its proposal to open non-stop services to the U.S., starting with direct flights to San Francisco or Los Angeles.

As Vietnam has never held an FAA rating, passengers travelling to the U.S. now have to transit through different countries and territories like China, Hong Kong and Japan, with a total time of 18-21 hours.

In 2004, Vietnam Airlines sought permission from the U.S. to provide direct services. However, the request was denied because it was judged that the CAAV did not meet safety supervision requirements set by the FAA.

Vietnam’s aviation industry has seen increasing demand in recent years. The country welcomed 12.5 million air passengers last year, up 14.4 percent from 2017, according to the General Statistics Office.

The country’s aviation traffic increased 16 percent on average each year from 2010 to 2017, according to data from the civil aviation regulator.

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