Vietnam Airlines plans to more than double its fleet in the next eight years, and many of the incoming aircraft will be widebodies. The airline in December launched Ho Chi Minh City- and Hanoi-London Gatwick services, both twice weekly. President and CEO Pham Ngoc Minh says, “In the next couple of years,” Vietnam Airlines plans to launch services to second-tier international gateways in Europe. It is eyeing Amsterdam, Berlin and Milan, says Minh. “We also see potential in India, South Asia and maybe the Middle East.”
Minh concedes that Vietnam Airlines has found it tough breaking into the London market, but says it will stay there. Vietnam Airlines’ services to Europe usually have a passenger load factor averaging 80-82%, but London is tracking at only about 60%, he says, adding that London has proven difficult because there is so much competition from other foreign carriers. London is a tough market also because of the current economic situation in Europe, says Minh; however, Vietnam Airlines has no plans to withdraw and aims to become stronger. “We have a policy that once we enter a market we never withdraw from that market, even if the economy” is bad or the passenger load factor is low, he says. It is important for Vietnam Airlines to increase its competitiveness by offering more frequency, so next year it plans to do that, he adds.
Vietnam Airlines also is preparing to launch services to the U.S., with Los Angeles as its first destination, but is unable to set a launch date until the U.S.completes its audit of the airline.
Besides widebodies, the carrier is adding narrrowbodies to strengthen its network in China, India and Myanmar. It plans to have flights from Siem Reap, Cambodia, to Mandalay, Myanmar, and to add flights from Siem Reap to Luang Prabang, Laos, says Minh. Vietnam Airlines manages Cambodia’s national carrier, Cambodia Angkor Air, and is a 49% shareholder. Minh says this carrier also plans to launch services from Siem Reap to Sihanoukville, Cambodia, and start services to Korea, China and Southeast Asian destinations. Currently, the only other country Cambodia Angkor Air serves is Vietnam.
The overarching strategy behind Vietnam Airlines’ network and fleet expansion is to reposition the carrier as one of Asia’s top-tier airlines. “Vietnam Airlines has ambitions to be a network carrier for the [Asia Pacific] region,” says Minh. “We will try to matchInternational and (SIA) in the region and by 2013 will hopefully be third in the market behind SIA and Thai Airways," he says. “Then maybe in 2020, we will be the successful No. 2 airline after SIA,” he adds, referring to Vietnam's ambition to over take Thai Airways.
Even though Vietnam Airlines is state-owned, it plans to launch an initial public offering (IPO). This year has been ruled out because of the unfavorable global economic situation, but the company is in the final stages of selecting an investment bank to assist and hopes to complete the IPO in next year’s second half, says Minh.
Money from the IPO may help pay for some aircraft on order. Vietnam Airlines head of fleet planning, Nguyen Thi Thanh Van, says they have 26on order for delivery in 2012-2014 and are evaluating A320-family aircraft, with the new engine option, for delivery in 2015-2020. She also says they have 10 -900s on order and have agreed to lease four more, two from CIT and two from ILFC. They also have eight on order and have agreed to lease a further three from ILFC and eight from Vietnam Aircraft Leasing Co. (VALC), says Van.
Vietnam Airlines is a major shareholder in VALC, but chooses to lease some aircraft through VALC because the other major owner in the leasing company is state-owned Bank for Investment and Development of Vietnam (BIDV). This means the leasing firm has more access to capital.
Van says the carrier plans to take delivery of its first A350 in 2015, a leased aircraft. She also says it plans to receive its first 787-9 that same year. Vietnam Airlines currently has 74 aircraft, according to the Aviation Week Intelligence Network database. Van says in 2020 it will have 170 aircraft. The other type of aircraft it plans to order are jet aircraft with fewer than 150 seats. Minh says the carrier will order at least 15-20 units. Van says the types being considered are the, the Mitsubishi Aircraft and the . She declines to say when a winner will be selected or first deliveries will arrive.