Vietnam Airlines in low-cost counter-attack
HANOI – State-owned Vietnam Airlines continues to ride the country’s business and tourism boom.
Pretax profits of US$18.8 in the first nine months of 2007 were almost as much as the whole of last year.
But the airline said in a statement that it had faced obstacles in the current business environment. These included competition on international and domestic routes and higher fuel prices.
The carrier transported more than 5.8 million passengers between January and September, a year-on-year increase of 12.7 percent.
Some 3.4 million were Vietnamese and 2.3 million were foreigners, with the latter figure up by only one percent against the same period last year.
Last week, Vietnam Prime Minister Nguyen Tan Dung approved the company’s plan to boost its fleet to 107 planes by 2020 and confirmed the previously announced partial privatisation of the airline.
The PM also agreed to establish a partly private company by reorganising subsidiary Vietnam Air Service Co., which industry sources said would be turned into a low-cost carrier.
The Centre for Asia-Pacific Aviation said although further details are not yet available, a response (from Vietnam Airlines) is likely to counter LCC competition from the Qantas-invested Pacific Airlines (to be brought under the Jetstar brand in future) and the planned LCC JV between AirAsia and local shipbuilder, Vinashin.
Ian Jarrett
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