Vietnam Airlines stated its revenue may increase by 31% year-on-year this year as it expands its route network and fleet (Thahn Nien, 10-Jun-2010). It stated sales may increase from USD1.3 billion in 2009 to USD1.7 billion this year. The carrier also expects a 28% year-on-year rise in passenger numbers to 12 million. Vietnam Airlines plans to expand its fleet to 115 aircraft by 2015 and 165 by 2020. The carrier will have 70 aircraft by year-end. CEO, Pham Ngoc Minh, stated Vietnam Airlines is also in the process of preparing its IPO and is seeking foreign partners. He also stated the carrier is ready to launch services to the US once it receives regulatory approval (Thahn Nien, 07-Jun-2010). It has applied to launch Ho Chi Minh City-Los Angeles via Osaka service.
Vietnam Airlines expects revenue increase of 31% this year
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Vietnam Airlines readies to enter US market, with Ho Chi Minh-LAX, following A350-900 HGW order
Vietnam Airlines has become the latest Southeast Asian airline to commit to new ultra-long range aircraft enabling the launch of nonstop flights to the continental US. Vietnam Airlines has acquired 10 higher gross weight A350-900s, which are capable of operating nonstop Los Angeles to Ho Chi Minh even in strong headwinds, from 2020.
Vietnam Airlines has been preparing for flights to the US for several years and now finally has committed to acquiring an aircraft capable of launching its preferred US route. Several US routes are possible but Ho Chi Minh-Los Angeles is by far biggest Vietnam-US city pair with over 100,000 annual one-way passengers.
Vietnam Airlines will join Philippine Airlines, Singapore Airlines and United Airlines – and likely Garuda Indonesia and Thai Airways – in operating nonstop flights from Southeast Asia to the continental US. New generation aircraft have opened up new opportunities to operate Southeast Asia-US fights economically but overcoming intense one-stop competition will be a challenge.
Southeast Asia-US market Part 3: new nonstops need to overcome stiff one-stop FSC & LCC competition
Southeast Asian airlines are seeking to capture a larger share of the Southeast Asia-US market over the next few years as they launch new flights to the US. Three of the region’s flag carriers and at least one long haul LCC are planning to launch flights to the US, intensifying competition in an already fiercely competitive market.
Southeast Asian airlines currently account for less than a 20% share of the total Southeast Asia-US market. Philippine Airlines and Singapore Airlines are the only significant players in this market and are aiming to increase their share as they add new nonstop routes. Garuda Indonesia, Thai Airways and Vietnam Airlines are also keen to become significant players as they launch flights to the US, replacing their now limited offline products.
However, market share gains will likely come at the expense of yields and profitability as competition with North Asian airlines – and to some extent US and Gulf carriers – intensifies. North Asian airlines now account for more than 50% of bookings in the Southeast Asia-US market and have increased their reliance on Southeast Asian connections as they have added US capacity, resulting in very competitive fares.