Issue No. 709

Vietnamese Airlines Continue to Grow

It was as good a time as any to announce new Boeing orders. President Trump was in town for a meeting with his North Korean counterpart last week. So VietJet, Vietnam’s largest low-cost carrier, used the occasion to finalize a deal for 100 B737-MAXs first placed at last summer’s Farnborough Airshow (where it incidentally ordered 50 A321-NEOs too). A full 80 of these MAXs will be MAX 10s, the largest of the MAX variants. The other 20 will be MAX 8s. VietJet now has (gulp) 200 MAXs on order, not to mention 116 A321-NEOs. Today, it flies just 70 planes.

VietJet’s latest aircraft shopping spree underscores its immense ambitions. But it also reflects the rapid development of the entire Vietnamese airline sector, one whose ASK capacity this quarter will increase 17% y/y (Diio Mi). VietJet, to be sure, is not alone in its growth fervor. In fact, it wasn’t even alone in ordering more planes last week. A new rival, Bamboo Airways, only bought 10 Boeing planes. But they were widebodies—B787-9s—making clear its intercontinental intentions. Although just getting started with A321-NEOs flying domestically, Bamboo will next attack East Asian markets like South Korea, Thailand, Korea, Singapore, Japan and Taiwan, before moving on to longhaul journeys to Australia, Europe and even North America.

Vietnam’s largest airline is state-owned Vietnam Airlines, no slouch itself when it comes to ambition. It refrained from ordering any new planes last week. But it did sign a major information technology contract with the U.S. company Sabre—President Trump attended the signing ceremony. And don’t think Vietnam Airlines isn’t growing its fleet. On the widebody end, it already has 12 A350-900s and 11 B787-9s, jets it uses to serve Europe and Australia, as well as busy shorthaul routes within Asia, including the domestic Hanoi-Ho Chi Minh market, although not yet North America.

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