Vietnam Airlines chief executive Pham Ngoc Minh remains focused on the long-term positioning of the carrier to meet its ambitions of leading Vietnam's development as a gateway to the region, undeterred by the current economic crisis.
"We saw the economic downturn as a good opportunity [for us]," explained Minh, during a recent interview at the carrier's Paris office. He says during a decade of rapid double-digit growth, the carrier has not had the opportunity to strengthen the infrastructure of the company to position it to meet its aggressive growth targets, but is doing so now during the slowing economic period.
"My main challenge is how we can put our aggressive plan for growth in place a feasible way, not too much too far, but at the same time I have to speed up this process," he says. "Otherwise when the giants surrounding us wake up after this financial turbulence, they will see a lot of room for growth. We have to extend our network, put our aircraft in place, before they wake up."
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The airline is about to embark on two key steps to further its ambitions; beginning formal negotiations with a view to joining SkyTeam next year and a fleet renewal plan.
Minh says the carrier aims to complete the integration process into SkyTeam within the next 14 to 16 months. "We [hope] to become a full member by mid-next year," he says. "As a major player, we try and show our ambitions. Vietnam is not only a destination. With Vietnam Airlines entering a global alliance we do hope we transform Vietnam into a major gateway for southeast Asia.
"We believe that Vietnam Airlines will grow and will become a leading carrier in Southeast Asia," Minh says, noting the carrier is aiming to improve its product to help raise its competitiveness with other major network carriers in the surrounding regions.
"One of the policies to build up our competitiveness is the fleet programme. Vietnam Airlines wants to renew its fleet as soon as possible. By 2015/16, the entire Vietnam Airlines fleet will be new generation aircraft."
The latest part of this renewal is about to begin as it replaces its ATR 72-200s with recently ordered -500 models. These will join the ATR 72-500s it already operates. "By the end of 2010, Vietnam Airlines will have a new fleet of 14 ATR 72-500s," he says.
"We have the same programme to renew the Airbus fleet. This programme will be completed by 2013, by then we have no more old [narrowbody] aircraft." The carrier has ten A320s in the fleet alongside 14 newer A321s and 24 more A321s on order. It has also just secured government authority to acquire 10 more A321s from Airbus and Minh, pointing to the good timing to negotiate for new aircraft, does not rule out taking more aircraft if it can strike the right deal.
On the long-haul, the carrier already has commitments in place for Airbus A350s and Boeing 787s. "With the A330 and Boeing 777, we start our replacement process around 2013 and we hope to complete it by 2016," he says.
The SkyTeam-bound carrier currently operates a fleet of 58 aircraft and in line with the strong recent and anticipated long-term growth of Vietnam and the neighbouring region, the carrier has previously said its fleet would reach 110 by 2020. It now expects its fleet to nearly reach that size by 2015. "By 2015 it will be 107, by 2020, it will be around 150," says Minh.
Despite the current tough market conditions - the airline's losses were cut last year and it only just remained in profit for the first quarter - Minh says growth in the region together with the boost SkyTeam membership will give it, means there will be plenty of opportunities to deploy the new aircraft.
"Vietnam as a single market will by 2020 have a population of 110 million. With open skies [in the surrounding area], it's a market of 130-150 million. Vietnam Airlines has enough room to put its fleet. We can also extend our market in southeast and northeast Asia. And with membership of SkyTeam we hope Vietnam will become a gateway to southeast Asia and I don't think 150 aircraft by 2020 is enough for a gateway," he says.
The potential of the Vietnamese market has not been lost on others. Qantas unit Jetstar has a presence through Vietnamese operation Jetstar Pacific, while Malaysia's Air Asia continues to covert a Vietnamese operation.
Vietnam's first private carrier, Boeing 737-800 operator Indochina Airlines launched services in November though another start-up VietJet now hopes to start flights in the fourth quarter. Vietnamese company Sovico Holdings has just increased its stake to 83% in VietJet, which had initially aimed to launch last year. Plans are also under way for another carrier, Mekong Air.
Meanwhile US carrier Northwest Airlines has also just been awarded rights to serve the country. Vietnam Airlines continues to target the launch of its own North American services, plans which have thus far been delayed.
"We intend to open our direct flight from Vietnam to west coast America," says Minh, without specifying timeframes. "Our priority is Ho Chi Minh City to Los Angeles. The reason we postponed it is because of the market conditions. But we keep open our plan."
Similarly the delayed planned part privatisation of the carrier also remains on the agenda. Vietnam announced plans in 2007 for its partial privatisation and had originally been eying a selling up to 20% of the carrier in 2008.
"The process of equatisation was supposed to start at the end of 2008, but because of the market situation and we made the decision not to stop, but to slow down," says Minh. "[But we] continue to look for a strategic partner and wait for a good market situation."
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Source: Airline Business
