CAPA Centre for Aviation, 10 September 2015. Vietnam Airlines begins new chapter with A350s, 787s. Are 777-8Xs and a strategic investor next?

An edited extract of the original article appears below.

Vietnam Airlines plans Australia expansion

Melbourne and Sydney are currently only served (by Vietnam Airlines) from Ho Chi Minh City.

The Australia and Moscow routes will eventually transition to new widebody aircraft…

Ho Chi Minh-Sydney is expected to transition to the 787 in 2016. Vietnam Airlines is also planning to begin serving Sydney from Hanoi, which will likely be launched in 1H2016 and initially be operated with four weekly A330 frequencies.

Ho Chi Minh-Melbourne is expected to transition to the 787-9 after Ho Chi Minh-Sydney. Hanoi-Melbourne is also in the Vietnam Airlines long-term network plan but is not expected to be launched in the near to medium term.

Vietnam Airlines relies almost entirely on local point to point traffic for its Australia services, with most demand coming from Australia in particular the Vietnamese communities living in Melbourne and Sydney. But it aims to gradually build up sixth freedom traffic as it expands in Australia, offering connections within Asia as well as on the highly competitive kangaroo route to Europe.

The carrier’s capacity to Australia has been flat over the last several years with fewer frequencies offered during off peak months in response to lower local demand.

In addition to flagging the possibility of new flights from Hanoi to Sydney and Melbourne, the Vietnam Airlines IPO prospectus identified Ho Chi Minh-Brisbane as a potential new route from 2017 and Ho Chi Minh-Adelaide from 2018. The prospectus, which was published in Sep-2014, said the expansion in Australia would “take advantage of the favourable geographical position of Ho Chi Minh city to offer services to the sixth freedom traffic right markets from Europe and North East Asia to Australia”.

But Vietnam Airlines could decide to forgo new destinations in Australia and instead focus on growing its existing two points. Over the last year it has studied the Australian market and determined that for now there is limited demand from cities other than Melbourne and Sydney…

 

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