Vietnam Airlines AIRLINES
HIGH
A strong local economy and increasing demand for air travel is proving an ideal foundation for a revamped Vietnam Airlines to reach out to the region and beyond WORDS GRAHAM NEWTON
V
ietnam Airlines is getting stronger by the day, expanding its fleet and network as it looks to serve a
hunger for air travel in the domestic market and a thirst for connectivity in the regional and global arenas. Positive figures back up the notion of
an “annus mirabilis” for the carrier in 2015. Its 127,500 flights represented a 3.5% increase over 2014. The load factor was also on the up – to more than 80% – with business-class travel improving 14% and premium-class travel rising by 40%. The increase in traffic was handled
Tan Son Nhat International Airport in Ho Chi Minh
effectively thanks to an impressive productivity surge. A 10% upturn in staff performance reflects the fact that the company achieved revenue gains without adding to staff numbers. Workers were more than compensated for their efforts, however, with salaries 28% higher on average. Organisational reshuffles, more efficient processes and a deepening connection between the airline and its employees all factored in to this promising result. Externally, there is much to be buoyant about also. The Vietnamese population has now reached approximately 95 million while GDP growth is set to reach close to 7% in 2016. The economic performance – aided in no small part by Vietnam Airlines – will surely see a rise in the disposable income of the middle classes and feed back into airline growth in a virtuous circle.
New investors The challenge for Vietnam Airlines is to maintain and even better these figures in 2016 and the years ahead. The target is to carry more than 19 million passengers this year, about 10% more than in 2015. The airline also wants to boost its financial standing, aiming to achieve consolidated revenue exceeding VND77.8 trillion ($3.5 billion), a consolidated profit before tax of VND2.3 trillion and a VND4.7 trillion contribution to the state budget. To help realise these lofty goals, the
airline’s strategy calls for new investors, following a business model change that
allowed the airline to advertise its wares as a joint-stock company in April 2015. The latest company wooed by Vietnam’s sterling performance is ANA Group, Japan’s largest airline company. ANA has entered into a Memorandum of Understanding (MoU) with Vietnam Airlines to acquire an 8.8% shareholding, worth about $108 million. The partnership aims to enable both
airlines to take maximum advantage of the increasing demand for air services in Asia- Pacific and, in particular, in the emerging Cambodia-Laos-Myanmar-Vietnam group of countries, which has the potential to be among the fastest-growing air traffic markets in the region. “Asia is a key growth market for ANA
Group as we expand our international footprint and Vietnam Airlines makes the ideal partner for us because we share the same high standards and approach to customer service and efficiency,” said Shinya Katanozaka, CEO of ANA Holdings, at the announcement of the MoU. From Vietnam Airlines’ point of view,
the partnership with ANA Group will help it acquire new process management technologies, expand its market, improve service quality and increase competitiveness in the international market. As part of the deal, an ANA representative will sit on the board of Vietnam Airlines and ANA Group will also provide Vietnam Airlines with operational and management know-how to help support service quality.
Expanding horizons Vietnam Airlines operates 66 flights weekly on 10 routes between Japan and Vietnam and there are plans to build on this following the ANA agreement. But Vietnam Airlines’ ambition does not
stop there. While it already operates 95 routes to 21 domestic and 29 international destinations with more than 360 daily flights, the aim is to strengthen the airline’s competitiveness through enhanced global connectivity. w
routesonline.com ROUTES NEWS 2016 ISSUE 3 23
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