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| Nha Trang beach: Better connection
with the world helps tourist industry. |
| Photo by Thomas Jandl |
Vietnam Airlines is the first company to take advantage
of the opportunities of the Bilateral Trade Agreement
(BTA), says the company’s Vice President Pham
Ngoc Minh, and the company also expects to gain
dramatically from improved business relations with
the United States.
Not only did Vietnam Airlines select Boeing’s
777-ER as its long-haul aircraft, signing a deal one
hour before the BTA was initialed by Vietnam’s
then-Trade Minister Vu Khoan (now the Vice Prime Minister)
and U.S. Trade Representative Robert Zoellick, but
the deal also became the first Export Import Bank-funded
transaction between the two nations.
According to Minh, a number of additional deals will
go to the U.S. aviation industry and associated sectors,
from computer upgrades to long-term spare parts sales.
Vietnam Airlines, in return, sees the U.S. market
as its biggest prize. Two million Vietnamese Americans
and five million veterans are a key target market,
says Minh, and already about half of all international
arrivals come from the United States. But today the
270,000 annual arrivals originating in America have
to use not always convenient connections, through
Seoul, Korea, for example.
With only final details remaining to be worked out
between the aviation authorities of the two nations,
Vietnam Airlines hopes to connect the West Coast of
the United States with Vietnam beginning this summer.
The new Boeing aircraft are key to providing first-class
trans-Pacific service. The 777-ER also serves a new
non-stop route to Paris, which so far necessitated
a refueling stop in the Persian Gulf.
The BTA has also led to an explosion in air cargo
in both directions, says Minh. “In 2000, we flew
2,000 tons of air cargo across the Pacific [to the
United States],” he says, “in 2001 it was
6,000 tons, and in 2002, 18,000 tons. We forecast
an additional 50% growth for 2003, and then 25% per
year.”
Imports are also doing well, albeit on lower levels
so far. An increase from 2,000 tons to 2,500 tons
between 2000 and 2002 is not as impressive as the
export figures, but experts say that numbers will
grow with a certain delay. The Vietnamese are hungry
for foreign products, but they need to earn the money
first to buy them.
Eighty percent of all cargo traffic to the United
States goes through Taiwan, but with an air traffic
agreement with the United States, Vietnam Airlines
is eager to get into that business as well.
“The gap between the two sides is very small,”
says Minh, referring to the negotiations on an Open
Skies agreement. “My personal view is we can
close it by the middle of this year.”
The wings of Indochina
Already, Vietnam Airlines is the number one airline
in the immediate region. While competing with global
giants such as Thai Airways, the blue planes with
the golden lotus have diligently created a strong
position as a regional carrier, linking Vietnam, Cambodia
and Laos and secondary airports in Southern China
with all the regional hubs – Hong Kong, Bangkok,
Kuala Lumpur.
Vietnam’s two main airports, Ho Chi Minh City
and Hanoi, already serve as transit hubs for international
passengers. “About 30% on the Hanoi-Vientiane
[Laos] route are international passengers [from neither
of the two countries],” says Minh. “Our
ambition is to open more routes into Myanmar and Southern
China.”
Vietnam Airlines has produced sound financials over
the last years, with growth rates of 35-40% between
1991 and 1995, and 15% passenger growth since 1997,
when the Asian financial crisis led to a significant
drop in air traffic in the region. The company has
also weathered war and even SARS without too much
damage.
Last year, Vietnam Airlines flew four million passengers,
earning a total of $650 million. Expectations for
2005 are 4.4 million passengers for $900 million,
and in 2010 management forecasts a total of 10 million
passengers and revenue of $1.4 billion.
Trial fares
In an effort to regain terrain after the SARS crisis,
Vietnam Airlines is offering substantial discounts.
From May to July 2003, tickets between Vietnam and
Australia will be discounted 28-55%, France 30 %,
Japan 30-50% and South Korea 50-75%.
Vietnam Airlines also works with hotels and tour
operators to provide attractive packages to attract
tourists to come to Vietnam.
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