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Aviation
AsiaEast Asia

Vietnam Airlines prepares to spend billions on new Boeing jets as it plans flights to US

  • Based on list prices of the popular Max 8, the order would be valued at about US$6.1 billion to US$12.2 billion before discounts
  • Vietnam Airlines expects to remain unprofitable on the Vietnam-California route for five to 10 years

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A Vietnam Airlines Airbus A321. Photo: SCMP Pictures
Bloomberg
Vietnam Airlines is considering an order of 50 to 100 Boeing Co. 737 Max planes this year to replace its ageing fleet of Airbus SE single-aisle aircraft and may also buy long-range jets in preparation for flights to California.
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The new aircraft will be for delivery between 2020 and 2030, Duong Tri Thanh, chief executive officer of the state-owned carrier, said in an interview in Hanoi. While Thanh did not specify which Max model the carrier plans to buy, based on list prices of the popular Max 8, the order would be valued at about US$6.1 billion to US$12.2 billion before customary discounts.

“It will be an opportunity for Vietnam Airlines to invite competition between the aircraft manufacturers, mainly Airbus and Boeing,” Thanh said. “The final plan will be submitted to the government. We expect something to happen this year.”

The airline is seizing expanded travel demand presented by Vietnam’s growing economy and US regulatory approval this month for its air-safety system, allowing carriers in the Southeast Asian country to fly to the US The carrier is also considering a purchase of at least two widebody planes – Boeing 777x or Airbus A350-1000 – to make its planned US services commercially viable, Thanh said.

Vietnam Airlines intends to begin flying from the nation’s commercial centre of Ho Chi Minh City to Los Angeles or San Francisco, both home to a large Vietnamese-American population, in 2020, Thanh said. Initially, the flights will include possible stops in Japan, Taiwan or South Korea before nonstop service begins in 2022, he said.

Given the distance and very tough competition, Vietnam Airlines expects to remain unprofitable on the Vietnam-California route for five to 10 years and will need government subsidies, Thanh said.

Vietnam Airlines also faces increased rivalry closer to home. Bamboo Airways became the nation’s newest airline to begin flying last month. The smaller carrier will sign a deal of about US$3 billion to buy 10 Boeing planes during US President Donald Trump’s visit to Hanoi this week ahead of his summit with North Korean leader Kim Jong-un, according to people familiar with the matter.

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