- Green Growth
- Your Consultant
|So far, only Vietnam Airlines has ordered wide-body aircraft that can handle a direct flight to the US, Photo: Le Toan|
Identified as an important market since 1996, the United States has been in Vietnam Airlines’ sights for a long time, with the national flag carrier opening a representative office in the US in 2001.
Vietnam Airlines has been co-operating with major airlines in the US such as Delta Airlines to operate codeshare flights from Vietnam via Narita Airport in Japan and Frankfurt in Europe to 15 destinations across the US.
Over the last 10 years, Vietnam Airlines has been actively preparing to weather technical and commercial challenges from such a route.
“We have been in active discussions with Boeing, Airbus, and other aircraft engine manufacturers about the appropriate aircraft required, those which are capable of operating nonstop from Los Angeles to Ho Chi Minh City even in strong headwinds,” Duong Tri Thanh, CEO of Vietnam Airlines, told VIR.
According to Thanh, the airline has ordered two kinds of airplanes, including the 365-seat A350-1000 and the 352-seat B777 8X, to serve the route to the US. Vietnam Airlines is also set to join Philippine Airlines, Singapore Airlines, and United Airlines, with the possible addition of Garuda Indonesia and Thai Airways in the future, in operating nonstop flights from Southeast Asia to the US.
Entering the market
Along with Vietnam Airlines, local budget carrier Vietjet also plans to expand its fleet with a wide range of aircraft in order to offer direct flights to American cities. In its plan, the company will open routes to areas with large Vietnamese communities in the US, such as California.
“So far, Vietjet has signed partnerships with major global airlines such as Qatar Airways and Japan Airlines to carry out codeshare flights to faraway destinations, including the US,” To Viet Thang, vice president of Vietjet, told VIR.
Despite being the newest domestic airline, Bamboo Airways has just passed the rigorous Air Operator Certificate after four years of efforts in accordance with the US’ Federal Aviation Administration (FAA) standards, and will undergo the International Air Transport Association’s Operational Safety Audit this year. “In 2020, Bamboo Airways will operate a direct route to the US for sure,” said Dang Tat Thang, general director of Bamboo Airways.
Saving time is the main benefit of direct flights, particularly with long routes such as Vietnam-US. Although there is also a competitive advantage to direct flights, currently the domestic aviation industry has no aircraft capable of such a long route.
At present, only Vietnam Airlines can meet the requirements of wide body aircraft which allows for refuelling while passengers remain on the plane. The two other carriers, Vietjet and Bamboo Airways, plan to set up direct flights to the US but are facing stumbling blocks due to the regulations requiring wide-body aircraft.
In addition, although Vietnam Airlines have made progress looking for suitable aircraft types, they cannot immediately operate the direct route because of the delivery schedule of the A350-1000 and B777 8X, according to Thanh.
The ordered aircraft are not expected to arrive until 2021 and 2022, respectively.
“For the B777 8X, we will receive four shipments during the months of February, June, October, and November in 2022. So the earliest flight could be in June 2022. For the A350-1000, the first two aircraft can be delivered during the second half of 2021, so the earliest flight might happen at the beginning of 2022,” Thanh added.
Besides, even when Vietnam Airlines have these aircraft, it will be difficult to maintain a consistent number of passengers and goods on the flights. Therefore the airline expects losses initially. “If we operate one-stop flights, the cost and flight time will also increase, meaning the competitiveness of the product will be weak,” Thanh said.
He also noted there is currently high competition within the US market from indirect routes of other airlines. “Now there are about 20 airlines offering a Vietnam–US route. The prices for these routes are very high.”
He still affirmed, “Until this route becomes feasible, we will continue co-operating with airlines in the US to expand codeshare flights. On that basis, if the efficiency of the route increases, we will think about opening it.”
Asides from preparing the fleet as well as finding ways to compete with international airlines, the nation’s airlines will have to ensure security standards are maintained and prove their capacity to operate direct flights.
Huge capacity in direct flights
Statistics from the Vietnam National Administration of Tourism showed that in 2018, Vietnam welcomed 903,830 tourist arrivals from North and South America, including 687,226 from the US. In January 2019, the respective figures were 105,309 and 80,658.
Meanwhile, according to the annual Open Doors report by the US-based Institute of International Education, the number of Vietnamese students in the US has risen for the 17th consecutive year in a row. In the 2017-2018 school year, the nation ranked sixth in the list of countries home to Vietnamese students, with a number of 24,325, up 8.4 per cent compared to the previous school year.
Data released by Boeing showed the potential of any future Vietnam-US route, with 700,000 arrivals in 2017 marking an average growth of 8 per cent in the 2010-2016 period. Los Angeles and San Francisco ranked first and second among the top 100 origins and destinations of the Vietnam-US route, with a growth rate of 8.4 per cent. Ho Chi Minh City-Los Angeles ranked third, whilst Ho Chi Minh City-San Francisco was the 15th most popular route which currently has no direct flights.
According to Airbus’ latest forecast for 2019, the market capacity of the Ho Chi Minh City-Los Angeles route can reach 136,000 arrivals and can climb by 18-20 per cent if direct flights become operational.
It is clear that there is huge potential for the Vietnam-US route, with direct flights set to grow the market between the two countries.
On February 15, the FAA announced that Vietnam complies with the International Civil Aviation Organization (ICAO) safety standards and has been granted Category 1 rating which allows Vietnam’s airlines to operate a direct route between Vietnam and the US.
The Category 1 status is based on an August 2018 FAA assessment of the safety oversight provided by the Vietnam Civil Aviation Authority, and is a technical prerequisite for Vietnamese airlines to fly to the US. The Category 1 determination is a substantial achievement.
The assessment and preparation process to achieve FAA Category 1 has lasted for nearly 10 years, from 2010 to the present. In order to maintain a Category 1 rating, a country must adhere to the safety standards of ICAO, the United Nations’ technical agency for aviation that establishes international standards and recommended practices for aircraft operations and maintenance.