Vietnam Airlines is studying the resumption of service to the USA as early as next year.
In a remarkably candid interview, CEO Duong Tri Thanh told CNBC that the state-run carrier doesn’t expect to make money on the route, but has other reasons for expanding unprofitable longhaul service.
The philosophy of the company is to help the economy and try to be viable and profitable. But growing the economy is more of a mandate. You can see on most of the intercontinental routes we are not making money. But we are helping to get people in and out.
That’s not a surprising revelation, but refreshing in its honesty. Often, CEOs and PR teams refuse to concede that their carrier will lose money but have goals beyond profit. I hope SkyTeam partner Delta will be ready to protest…
Think about the competitive landscape Vietnam Airlines faces. Singapore Airlines will start nonstop service to Los Angeles and New York again this year. Malaysia Airlines, Garuda Indonesia, and Thai Airways are also considering new service to the USA. Philippines Airlines already flies nonstop to Vancouver and Los Angeles and Mainland Chinese carriers are quickly adding flights to the USA.
The fact is, the Southeast Asian market is already oversaturated and Vietnam Airlines doesn’t have all that much to offer that will distinguish it from others. Furthermore, with strict visa requirements and dated facilities, Ho Chi Minh City or Hanoi are not ideal transit points for secondary cities in Asia.
While there are 2,000,000 Vietnamese-Americans living in the USA, Thanh is not blind to the uphill battle.
The plan is the end of 2019. But if it is not feasible and it is too much we have to wait to find a way to work with partners to improve the traffic mix. Like most of the airlines, like Philippines and Thai, we don’t have enough business travelers. We are just dependent on visiting friends and relatives. That is no way to make money.
I recently flew the Vietnam Airlines A350 from Ho Chi Minh City to Frankfurt, a good flight but not a great flight. If Vietnam Airlines wants to compete for business travelers, it will also need a more competitive product.
image: Русский / Wikimedia Commons