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 September 2005


By Volker K. Thomalla

“We are still a young company,” said Dr. Nguyen Sy Hung, CEO of Vietnam Airlines, during an interview with FLUG REVUE in Hanoi. Yet according to Hung, the roots of the present Vietnam Airlines date back to the year 1956. The CEO explains the apparent contradiction by referring to the restructuring into Vietnam Airlines Corporation which was completed in 1993. The company may still be a state-owned carrier – the members of the Board of Management are appointed directly by the Minister President – but “the company works in a market-oriented way,” according to Nguyen Sy Hung. “We have to accept competition.”

Boeing 777
Boeing 777

Since the restructuring 12 years ago, Vietnam Airlines has been steadily modernising its fleet. The Russian Tu-134 and Ilyushin Il-18 have been taken out of service and replaced by modern aircraft. Only one Tu-134 and one Il-18 remain as possible future museum exhibits, parked on the apron in front of the new maintenance hangar at Noi Bai international airport, Hanoi. Today the regional fleet is composed of nine ATR 72's, while medium-range flights are covered by the Airbus A320 and A321. The Boeing 777-200ER is the company's preferred long-haul aircraft, although it is also used at times of heavy demand on the route between Hanoi, the political centre of this south-east Asian country, and Ho Chi Minh City, the economic centre.

By the end of the year, the 777 fleet strength will have risen to ten aircraft. Four of the “Triple Sevens” were purchased directly from Boeing, while six are leased from ILFC. Vietnam Airlines' own 777's are powered by the PW4084 engine from Pratt & Whitney, while the leased aircraft each have two General Electric GE90 turbofans. When the 777 fleet is complete, the last 767-300ER's, with which the airline has serviced its long-haul route network since 1994, will also be taken out of service

Vietnam Airlines is one of the most rapidly expanding airlines in the growth market of Asia. And this trend is expected to continue over the next few years. “We have presented our strategic plan through to 2015 to the government, and it has been approved. Over the next ten years, we plan to expand the fleet from its present 37 aircraft to between 65 and 70,” says Nguyen Sy Hung. Up to now the airline has not operated any cargo aircraft, but this is set to change over the next few years.

In December 2004, Nguyen Xuan Hien, President of Vietnam Airlines, signed a purchase contract for four new Boeing 787-8's in Washington, with options for a further eleven aircraft of the same type. The 787's, which are firm orders, should be delivered in 2009 and 2010. If the letters of intent should be transformed into firm orders, the eleven additional Dreamliners would join the fleet between 2010 and 2013.

Vietnam Airlines employs a workforce of 14,000, of whom only 9,000 work at the airline. The airline has 300 pilots. 60 of these do not have a Vietnamese passport, but come from the UK, France, Canada and Australia. They fly with Vietnam Airlines on both the Airbus and Boeing fleets. Over the next few years management wants to reduce the number of foreign pilots, not just because they are many times more expensive than Vietnamese personnel. During the last few years the airline sent 105 would-be pilots to France and Australia for training. There they are being trained to take their place in the cockpit of a passenger aircraft. At present about 30 percent of all the pilots have a military background. However, they had to undergo strict civilian training before they were offered employment in the cockpit of Vietnam Airlines.

The transformation of the airline from the socialist wallflower to the competitor to be taken seriously is also evident in Vietnam Airlines' outward appearance. On 1 November 2002, the company introduced a new livery and a new logo. As its main colour, the airline now uses a dark greenish blue, which represents the Vietnamese landscape. The lotus blossom is a symbol for perfection in Vietnam and took over from the stork as the airline's symbol. The colour gold was chosen to reflect the high quality of the product and an aura of luxury. Vietnam Airlines introduced the new design in parallel to the biggest fleet modernisation programme in the company's history. The company's first Boeing 777-200ER was also the first aircraft to be painted in the new colours. By 2008, all Vietnam Airlines aircraft will have been repainted in the new colour scheme during routine overhauls.

The company's route network covers 42 destinations in 16 countries. In Europe, Vietnam Airlines currently flies to three destinations: Moscow, Paris and Frankfurt. Since the end of June, a 777-200ER has been flying a weekly non-stop service to Frankfurt from Hanoi and two non-stop services per week from Ho Chi Minh City. As Trinh Ngoc Thanh, Director of Market Planning, explained to FLUG REVUE, “If the traffic trend justifies it, we would be happy to operate five to six flights per week to Frankfurt. We chose Frankfurt as a destination in the German market because Frankfurt is one of the best hubs in Europe. The airport has a high service quality and excellent international flight connections. On the other hand, it is very difficult to get slots there.”

By the end of 2005 the Lotus airline should have carried 70,000 passengers on its flights to Germany. Flights for the months of September and October were already largely sold out in July.

Vietnam Airlines has introduced a three-class concept onboard its long-haul aircraft, the three classes being Business Class, Deluxe Economy and Economy. In Deluxe Economy, passengers enjoy a generous 97cm seat pitch. In Economy, seat pitch is 82cm and in Business it is 149cm. The airline is thinking of employing some German-speaking cabin staff in the near future to look after Business Class passengers on flights to Germany.

The rising demand for flights to the south-east Asian country is fuelled by several factors. On the one hand the country has opened itself up to tourism and is presenting itself with infrastructure projects as an up-and-coming travel destination, while on the other hand it is developing economically and is increasingly becoming established as a producer of goods. In 2004, 2.8 million foreign visitors went to Vietnam. In the first five months of 2005 alone, 1.7 million visitors went. Vietnam Airlines intends to profit from this growth and is expecting eight to nine million passengers in 2010. Last year the airline handled 2.29 million international and 2.75 million domestic passengers. This year's plans envisage a total of 5.75 million passengers. The load factor for the fleet as a whole is 72 percent.

Another source of demand for Vietnam Airlines is the Vietnamese who are living abroad, having fled from the country during and after the Vietnam War. Today they are increasingly returning to visit their relatives, and London is right at the top of the list of European destinations that Vietnam airlines would like to add. According to Nguyen Sy Hung, the airline would also like to expand towards India and Indonesia.. Plans for direct flights to the USA and Canada have been finalised, and by the end of 2006 aircraft with VN flight numbers should be regular visitors to North America.

The airline is biding its time as to whether to enter into an alliance. At present it relies on selective collaboration with many different airlines. Thus, for example, there are codeshare agreements with Air France, China Airlines, Cathay Pacific, Japan Airlines, Korean Air, Malaysian Airlines and Laos Aviation.

As a state-owned carrier, Vietnam Airlines has to provide long-haul aircraft for government purposes from time to time. Thus, for example, the Minister President of Vietnam flew to North America in June 2005 on a 777.

When asked whether the airline was making a profit, Trinh Ngoc Thanh replied, “Of course we are profitable. Revenue is running ten percent above the planned figure and we will also once again make a profit this year.”

From page 28 of FLUG REVUE 9/2005

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