Vietnam has proven to be an increasingly popular destination for tourists, helping generate strong growth in demand for air travel to, from and within the country. National carrier Vietnam Airlines has been reaping the benefits, having completely modernised its fleet and last year become a member of the SkyTeam global airline alliance, alongside carriers such as Air France, KLM, China Eastern Airlines, Delta Air Lines and Korean Air.
18th Jul 2011
Vietnam Airlines has made vast strides towards becoming a serious international contender as travel demand to Vietnam increases, including securing membership both of IATA and SkyTeam, writes Andrzej Jeziorski.
Vietnam has proven to be an increasingly popular destination for tourists, helping generate strong growth in demand for air travel to, from and within the country.
National carrier Vietnam Airlines has been reaping the benefits, having completely modernised its fleet and last year become a member of the SkyTeam global airline alliance, alongside carriers such as Air France, KLM, China Eastern Airlines, Delta Air Lines and Korean Air.
Vietnam Airlines’ history dates back to 1956, when the North Vietnamese government established its Civil Aviation Department, marking the birth of Vietnam’s civil aviation industry. The airline began operations with a fleet of just five, Soviet-built aircraft, which started operating on domestic flights in September 1956.
A major turning point for the carrier came in April 1993, when Vietnam Airlines was officially established as the country’s flag carrier. Three years later, in May 1996, Vietnam Airlines Corporation gathered together 20 aviation enterprises into a single group, with the airline itself as the core business.
October 2002 marked the debut of the carrier’s Golden Lotus logo as it strove for recognition as a world-class carrier. According to the airline, the new brand was simultaneously accompanied by significant improvements in the company’s infrastructure, operations and fleet.
The carrier says the arrival of its first Boeing 777 in 2003 was a milestone in the modernisation of its fleet. “Three years later, Vietnam Airlines became one of the most modern fleets in the region,” the company says.
According to the airline, it has experienced an average traffic growth rate of more than 10 percent per annum, with the exception of 1997, when the Asian financial crisis struck.
Today, the airline operates a fleet of 69 aircraft to 20 cities in Vietnam and 26 international destinations in Asia, Australia and Europe. The network today covers 19 countries – not including code-share destinations – with hubs at Hanoi’s Noi Bai International Airport and Ho Chi Minh City’s Tan Son Nhat International Airport. Once it opens by 2020, the new Long Thanh International Airport – about 40km north-east of Ho Chi Minh City, will also be a Vietnam Airlines hub.
The carrier passed its International Air Transport Association (IATA) Operational Safety Audit in 2006, confirming it as a member of the airline group, which represents some 230 carriers, accounting for about 93 percent of scheduled international air traffic.
Vietnam Airlines says it expects its current fleet of 69 aircraft to expand to 115 by 2015, growing further to number 170 by 2020. The current fleet comprises Airbus A320 and A321 narrowbodies, widebody A330s, ten 777-200ERs, two Fokker 70s and a turboprop fleet of 15 ATR 72s. The carrier has outstanding orders for dozens more aircraft – including 12 units of Airbus’s planned A350-900 widebody twin, four A380-800s and 16 Boeing 787s.
The expansion of the fleet has created an increased need for pilot training. In October last year, the airline and Bay Vet Flight Training agreed to train 60 pilots in Vietnam during 2011 and 2012. Last year, the carrier employed 636 pilots, of whom 60 percent were Vietnamese. By 2015, the airline hopes to increase the number by 75 percent, meaning it needs to hire at least 100 new recruits a year up to then.
While the company’s core activity is passenger transportation, it also earns revenue from catering and maintenance, repair and overhaul (MRO) services, via subsidiaries. The company’s MRO unit is Vietnam Airlines Engineering (VAECO), while its catering units are Noibai Catering Services and Vietnam Air Caterer, which offer their services to other carriers operating at Vietnam Airlines’ hubs.
The carrier has become increasingly involved in the MRO sector, ever since it first began maintaining its own western aircraft – the ATR 72 – in 1992. VAECO was established in January 2009, taking over maintenance of its parent’s fleet and offering third-party work.
The MRO service provider’s capabilities now cover line maintenance of all types operated by the carrier, including: A-checks for 767 and A330 aircraft; C-checks for ATR 72s, A320-family models and 777s; and D-checks for Fokker 70s. Beyond work done by VAECO, Vietnam Airlines also has maintenance agreements with MRO providers such as Ameco Beijing, China Airlines, Evergreen Aviation Technologies, GAMECO and Hong Kong Aircraft Engineering.
The carrier’s cargo division, Vietnam Airlines Cargo sells hold space on the company’s passenger fleet, as well as operating a number of dedicated freighters. Vietnam Airlines also has a wholly-owned regional airlines subsidiary in southern Vietnam, called Vietnam Air Service (VASCO), and owns 49 percent of Cambodia Angkor Air, Cambodia’s national carrier.
In June last year, Vietnam Airlines became a member of the SkyTeam global alliance – the only carrier in South-East Asia to be part of that grouping.
“Joining SkyTeam marks an important step forward in Vietnam Airlines’ future growth,” the carrier says, adding that the alliance gives passengers seamless access to a global network covering more than 850 destinations in 169 countries.
SkyTeam Chairman Leo van Wijk said last year that Vietnam Airlines’ membership of SkyTeam, along with that of China Southern Airlines and Korean Air, brings the group “closer to becoming the leading alliance for Asia”.
Vietnam Airlines has been working towards expanding its network and has been particularly interested for some time in launching services to the US – where more than 1.2 million Vietnamese live. The plans were announced in December 2003, but postponed since then because Vietnam was not part of the US Federal Aviation Administration’s aviation safety assessment programme. The carrier has most recently said it plans to launch services this year.
In the meantime, the carrier has now announced plans to fly from Hanoi and Ho Chi Minh City to London’s Gatwick Airport starting on 9 December – the first non-stop services to be launched between Vietnam and the UK. Flights will take place twice-weekly from each of the Vietnamese cities, to be operated by Boeing 777-200ER aircraft, configured with 309 seats in business, premium economy and economy class.
The new air link to the UK aims to tap increasing tourist demand, with about 90,000 leisure travellers from the UK visiting Vietnam in 2010.
Other destinations the airline has said are in its sights are: Mumbai, India; Brisbane, Australia; and Doha, Qatar. The carrier launched services from Ho Chi Minh City to Beijing and Shanghai last year, as well as Hanoi-Shanghai services.
The carrier also has plans in place to increase its revenue from US$1.86 billion in 2010 to US$7 billion by 2020, anticipating that it will carry 35 million passengers and 620,000 tonnes of cargo a year by that time. As of now, Vietnam Airlines has about 40 percent of the international air travel market to and from Vietnam. Domestically – together with its VASCO unit – the carrier has an 80 percent share.
In January this year, Vietnam Airlines announced that it is reviving plans for an initial public offering (IPO), to take place by the end of 2012. The previous effort was shelved as a result of the global economic downturn of the past three years.