VietJet Air “yet to have concrete plan for long-haul” growth
The deputy director commercial, strategy and planning of Vietnamese low-cost carrier VietJet Air, Jay L Lingeswara has played down speculation that the airline is to acquire a small fleet of widebodied aircraft to launch long-haul flights. Speaking at the Routes Asia Strategy Summit in Okinawa, Japan earlier today he dismissed a quick launch date for the introduction of the flights, but confirmed it remains a short-term consideration.
"Long-haul low-cost is absolutely on our radar - but we need to find the right people to work with, whether this is an alliance or another carrier,” he said. “There are no concrete plans for this,” he noted, but highlighted that while these discussions continue to be advanced it will instead focus on growing its regional network on long legs of between four and six hours flight team.
"Competition in Asia is getting tight - the price point will get tighter for airlines with the rise of low-cost carriers. There will be consolidation or an alliance in the future,” he added.
There was a consensus among the airline executives joining him on his panel session that the low-cost market will be able to grow in developing economies in Asia through the growth of connectivity from secondary cities. Venggatarao Niadu, head of network planning, AirAsia X said 2017 would be dominated by more second and third tier airports being opened to connectivity, while Jonathan Hutt, social marketing director, Spring Airlines said their existed a strong potential for secondary and tertiary airport demand out of China.
“We are already seen this trend towards offering more routes from secondary airports at VietJet Air,” said Lingeswara. This is happening within its home market in Vietnam where it has started to serve Daegu, a city in North Gyeongsang Province, South Korea rather than the constrained Busan.
This does bring an element of risk to its business model, but demand is strong enough to maintain the route. VietJet Air generally allows between 15 months for a short-haul route to deliver a profitable return before its drops the route, according to Lingeswara, a similar level to that considered acceptable by its fellow low-cost peers. Jetstar, meanwhile allows around 18 months as it can take that long “to reach maturity” said its head of network and schedule, Ed Sanders.
At Spring Airlines, Jonathan Hutt said it is rare that Spring Airlines actually cancels flights due to seasonal why that it approaches its schedule plans. “We are a little risk averse so route cancellations in our network are very minimal and quite often we may simply introduce a stopover en route to sustain a route in an off-peak season,” he said.