Airlines face challenges in opening direct flights to US

Hanoi (VNA) – Vietnamese airlines will suffer from pressure with their plans to launch non-stop flights to the US as they may face critical financial losses in the first years of operation.

Vietnam Airlines and Bamboo Airways have outlined plans and roadmaps to operate direct flights to the US.  (Photo: VietnamPlus)

Flying directly to the US – A dream comes true

Non-stop flights from Vietnam to the US will be a brand new market full of potential for local airlines. According to statistics from the Civil Aviation Administration of Vietnam (CAAV), the market capacity between Vietnam and the US in 2017 rose to over 700,000 passengers with average growth during 2010-2017 of more than 8 percent.

In a bid to launch a direct route to the US, the CAAV and Vietnamese airlines have worked tirelessly to study the market, identify effective products, and achieve the Category 1 rating certification (CAT1) by the US Federal Aviation Administration, among others.

Rejecting the notion that “flying to the US is impossible”, Chairman of FLC Group Trinh Van Quyet affirmed “Bamboo Airways will operate direct flights to the US, and will gain  profit of 8 billion VND (346,000 USD) a month if the airfare is sold at 1,300 USD”.

Quyet explained airfares and stable number of passenger are key factors to decide the costs on the Vietnam-US route. Gains could be even much higher if the airline flies to a third country where it can woo passengers from other carriers.

Despite considerable risks, the Bamboo Airways owner expressed his determination to operate Vietnam-US flights in the fourth quarter of 2020, becoming the first carrier in Vietnam to fly to the western hemisphere.

Meanwhile, CEO of Vietnam Airlines Duong Tri Thanh said the carrier had a plan to launch direct flights to the US right after it made order for Boeing 787 aircraft in 2008. Besides obtaining the CAT1, Vietnam Airlines had to make meticulous preparations for its plan, including commerce, market and legal procedures, and it could take the airline at least 1-2 years to realise its plan.

“If non-stop flights can shorten flying time, Vietnam Airlines will gain competitive edge over other carriers that have to fly to a third country, particularly Vietnam Airlines will be the first choice of high income earners who have tough requirements for travelling time”, Thanh said.

He added that along with improving the airline’s brand value, the expansion of its flying network will help Vietnam Airlines operate connecting flights to other destinations in the US as well as countries in the region like it has done with current flights to Europe.

Meanwhile, Boeing Chief Representative in Vietnam Andy J. Gayer said the Vietnam-US route is potential as flights between Ho Chi Minh City and Los Angeles with 409 passengers per day, and Ho Chi Minh and San Francisco with 273 passengers per day have not been operated yet.

“Nearly 700 passengers have not been serviced on the Vietnam-US route, equal to two aircraft”, he said.

Fierce competition

Actually, fierce competition made US aviation giants – Delta Airlines and United Airlines to give up their plans to open direct US-Vietnam flights, according to President of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc.

Vietnamese airlines may face losses in the first years when they have to struggle with pressure in investment of modern aircraft and improvement of service quality, he said. However, a carrier’s success weighs strongly on economic growth and demand for travel of tourists, Vietnamese expats and Vietnamese students, among others.

Together with local airlines’ efforts to improve competitive capacity, the Government should complete aviation infrastructure to develop the country into an aviation hub of the region as airlines will get much benefits from that, Loc said.

Vice President of the Vietnam Association of Aviation Science and Technology Do Nguyen Khoat described competition with experienced airlines in the world as a headache problem.

“Non-stop flights will help reduce fuel and transit costs; however, bold investments must be made for modern aircraft fleet. Therefore, it is necessary to carry out detailed study”, he added.

Having a contrary viewpoint, an aviation expert said it is not easy to operate non-stop flights to the US, and the market is not really a potential one.

“It takes each airline at least five to ten years to reach breakeven point on the Vietnam-US route. One carrier is estimated to experience a loss of 30-50 million USD each year”, he said.

Thanh said as around 20 airlines are operating flights between the two nations with stopovers in a third country, resulting in a price pressure.

Qualified aircraft is needed for the long-haul route, Thanh said, adding Vietnam Airlines is studying the best airplanes to launch flights to the US./.