Blossoming Economy Brings New Middle Class To The Skies

Vietnam is proving to be one of the fastest-growing commercial air travel markets in the world... and the plane-making heavyweights are vying for a piece of what could be a very lucrative pie.

Boeing, Airbus and Bombardier have begun courting state-owned Vietnam Airlines and its modernization plans for its fleet of 45 Boeing, Airbus, ATR and Fokker aircraft. The carrier is on the brink of partial privatization and a new fleet is deemed necessary to help it successfully compete, according to Agence France-Presse.

There is also talk of the carrier transitioning its subsidiary, Vietnam Air Service Co., into a low-cost carrier.

"We want to be one of the leading regional carriers," said Bach Quoc Thang, Vietnam Airlines general manager for corporate affairs. "Singapore Airlines and Cathay Pacific are the examples we want to follow."

The communist-ruled country's economy is growing at more than eight percent a year, creating a new middle class able to afford such luxuries as air travel.

A major deal with Boeing was actually expected a year ago, when US President George W. Bush made his visit to Hanoi... as well as during Vietnamese President Nguyen Minh Triet's trip to the US in June, but nothing materialized either time.

Last month, former US ambassador Michael Marine encouraged the country to buy more Dreamliners, saying the 787s would fill the carrier's requirements for direct US flights. Four Dreamliners are due to be delivered in 2009 as well as five A321s next year.

Airbus executive vice-president for Asia-Pacific, Edouard Ullmo, said during an A380 demonstration visit to Hanoi on September 2 that Vietnam Airlines was growing so quickly, that by 2012 or 2013 it might very well be in a position to operate such a large aircraft.

Adam Sitkoff, Hanoi's American Chamber of Commerce executive director, told the AFP it would be in the country's best interest to quickly make a deal with Boeing.

"The future growth of Vietnam's important tourism sector depends on having enough passenger aircraft," he said. "The longer Vietnam Airlines waits to purchase the Dreamliner, the longer it will be until the planes are delivered."

Not to be outdone, Montreal-based Bombardier Aerospace took its 90-seat CRJ900 NextGen jet to Vietnam last week, saying its aircraft would have the lowest per-seat fuel costs per seat on domestic and Asian routes.

"This would be an ideal feeder aircraft for Vietnam's domestic and regional air transport needs," said Trung Ngo, vice president of Bombardier. Vietnam Airlines executive vice president Nguyen Van Hung wouldn't give an indication as to when a formal decision would be presented.

"I think it will be soon since the government of Vietnam is now considering and studying the fleet development project of Vietnam Airlines," he said.

"It means that Vietnam Airlines has the right to select the appropriate aircraft for its fleet," Trung said. "But it's not Vietnam Airlines which makes the decision, it is Vietnam's government which makes the decision."

Prime Minister Nguyen Tan Dung is expected to make his decision soon. Aviation officials are expected to join him on a trip later this month to New York and Paris.

Financing for the new fleet will come from Vietnam's first aircraft leasing company recently established by the carrier, Vietindebank, Petrovietnam and telecom group VNPT, with initial capital of 200 million dollars.

FMI: www.vietnamairlines.com, www.boeing.com, www.airbus.com, www.bombardier.com