Air Transport World

Good morning, Vietnam: Vietnam Airlines' prospects rise on the wings of 777s and a new air services agreement.(Profile)

The bad old days when state-run Vietnam Airlines was just a shabby little domestic carrier operating shabby Russian aircraft, with service to match, are a fading memory. Powered by aggressive fleet expansion and a new air services agreement with the US initialed in October, ambitious VN has signaled its intention to become a significant player in Asia's hotly competitive aviation market. That, officials concede, may take some time, but the groundwork is being put into place.

A key driver is national pride and stubborn determination to emulate its far more advanced Asian rivals. But the airline also is starting to profit from Vietnam's steady economic growth and a bounce-back in travel following early containment of SARS after an initial steep decline in traffic.

Vietnam Airlines carried 1.8 million passengers in the first six months of 2003, of which 707,000 were international. In terms of traffic, figures are reversed, with VN generating 1.8 billion RPKs on international services, versus 835 million in domestic services. It operates an average of 56 domestic flights and 49 international flights each day. According to figures supplied by the airline, VN posted pre-tax earnings of $49.8 million last year up from $29.3 million in 2001. Revenues totaled $523.9 million and operating profit was $39 million.

By 2005, President and CEO Nguyen Xuan Hien tells ATW, the carrier plans to increase the number of passengers it carries by up to 16% and annual revenues by 14% to $1 billion. His optimism comes on the wings of an updated economic assessment by the Asian Development Bank in Manila that says average regional growth next year will accelerate to 6% with the diminishing impact of SARS and the war in Iraq and delayed recovery in industrial countries.

Also in the airline's favor is the fact that the nation's communist leaders appear to be moving toward a more liberal economy and are focusing efforts on promoting foreign tourism. …

Log in to your account to read this article – and millions more.