Vietnamese airlines have been excited about direct flights to the US. However, the biggest difficulty is not technical, but commercial, even under the controlled Covid 19 pandemic.
Ambition to flight to the US
In early November last year, Bamboo Airways was excited to announce that the US Department of Transportation officially licensed the carriage of passengers, goods, and parcels between Vietnam and the US for this airline. This is one of the most important prerequisites for a foreign airline to be allowed to fly to the US.
Accordingly, FLC’s airline will be allowed to conduct direct flights by Boeing 787-9 Dreamliner, between major airports from Vietnam such as Hanoi and Ho Chi Minh City to all international airports in the US. In particular, Bamboo Airways is considering building the first foundation flights to Los Angeles or San Francisco, these two cities located on the US West Coast.
Deputy General Director of Bamboo Airways Mr. Nguyen Ngoc Trong said that depending on the disease control situation in the US and market conditions, the airline will operate the fastest direct flight to the US in early 2021.
More than a year ago, on September 5, 2019, a representative of Vietnam Airlines said that the airline was also granted a license to transport commercial passengers, goods, and parcels between Vietnam and the US by the US Department of Transport.
America is a market that airlines want to jump into. However, in addition to the license granted by the US Department of Transportation, to officially fly to the US, both Vietnam Airlines and Bamboo Airways need to continue to apply for a license at the competent authorities of the US, including the Federal Aviation Administration (FAA), the US Transport Security Agency (TSA), the US Customs and Border Protection Agency (CBP), the US National Traffic Safety Commission (NTBS) and some other competent agencies before officially operating flights to the US.
Technically, the airline that wants to fly to the US must have a 2-engine aircraft with a minimum flight time of 180 minutes, long-distance over-ocean flight such as the A380, Boeing 787 of Vietnam Airlines, and Bamboo Airways’ Boeing 787 Standard 2 engines over the ocean of the US authorities.
Due to the range of Boeing 787 about 14,100 km, the direct flight from Vietnam to the US must have a technical stop at the transit point to refuel. If flying from Vietnam to the West Coast of the US, the transit airport can be in Taiwan, South Korea, or Japan.
However, the difficulty is not mainly due to procedures or technology because airlines can invest in new aircraft that meet the US standards, but actually in the market.
Not easy to earn
Direct flights from Vietnam to the US require a technical stop for refueling, so there must be direct competition with existing connecting feeder flights. While the transit flights, although they take longer to wait for the connection, the fare is cheaper and more competitive.
According to research, the average ticket price from Vietnam to the US of airlines such as Korean Air, Cathay … falls to about $1,200. Thus, to attract customers, the fare of Vietnamese airlines will have to be equal to or lower than that. However, with this price, according to the assessment of aviation experts, it will be difficult to offset the loss.
According to calculations by Vietnam Airlines, before opening a direct Vietnam-US route, it would take 5 years to break even and the potential loss was about $30 million a year. Therefore, airlines must find ways to cut losses, reduce the loss to below $30 million/year. The leaders of Vietnam Airlines have also admitted that this is a very competitive route, the fare is very low, the cost is high, so the ability to reach breakeven and make profits is very long.
Experience shows that, since the introduction of the 2003 aviation agreement, American airlines have had the right to fly directly to Vietnam such as United Airlines, which flew to Tan Son Nhat from 2007 to 2012; Delta Air Lines since the end of 2008 has a flight, but they have to stop after only 6 months. So the US airlines used to fly directly from the US to Vietnam but then had to stop because of losses and switch to connecting flights.
Aviation expert, Assoc. Prof. Dr. Nguyen Thien Tong said that, compared to 10 years ago, the demand for customers has increased, the aircraft engineering capabilities have been different, but no US airline has opened direct flights to Vietnam again because the cost is still high and the fare is more expensive than connecting flights.
Vietnamese airlines are forced to self-assess the potential for profit and loss between direct flight options to meet the need for passengers to accept more expensive fares with faster time with cost-effective connecting flights. Cheaper tickets with longer transit times.
“However, in the current Covid 19 pandemic, it may not be until 2022 that world aviation demand will recover, but even then direct flights between Vietnam and the US are unlikely to be profitable. Therefore, airlines should not open direct flights to the US in the current period,” emphasized Tong.
With Vietnam Airlines only, the dream of flying directly to the US needs to be carefully considered in the difficult business and financial context, and a state capital spending “rescue” must also be responsible, preserve capital and profit. “Dealing with losses, effectively implementing production and business activities” as assigned by the National Assembly.