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Aviation History
1995
1995 - 3315.PDF
Vietnam Airlines is finally coming into its own as a regional, and international, carrier. PAUL LEWIS/HANOI VIETNAM AIRLINES HAS been flying longer than most Asian carriers, ever since Ho Chi Minh won his country indepen dence from France in 1954. Prolonged conflict and economic deprivation, however, stifled the carrier's development for much of its 40-year history. Vietnam Airlines is only now beginning to catch up with its regional counterparts. With the outbreak of peace in the Indo- China region (Cambodia, Laos and Vietnam), and the lifting of a US-led economic embargo in early 1994, Vietnam is finally opening up to die international community. The country took a major step forward in July with die establish ment of diplomatic relations with Washington and its entry into the economically powerful Association of South-East Asian Nations (ASEAN)- Vietnam Airlines, in turn, has begun to emerge on to the international airline scene. It already has observer status with the Inter national Air Transport Association and the region's Orient Airlines Association, and is set to join both. JUMP IN TRAFFIC In 1994, die airline carried a total of 1.67 mil lion passengers, including over 700,000 on international routes, and this is expected to climb to 2.1 million by the end of 1995. While this still pales into relative insignificance when compared to other regional airlines, it does represent a 236% jump in traffic over the past four years. Vietnam, furthermore, has tremendous potential for even greater growth in the future. Nine years of economic reform produced an 8.8% increase in the country's gross domestic product in 1994, and this is projected to acceler ate further, according to die Asian De velopment Bank. Around Si7 billion-worth of foreign investment has been committed to Vietnam, and the Government is hopeful of raising this to $40 billion by 2000. The country has an expanding population, now standing at around 73 million people, with another estimated 3 million ethnic Vietnamese living overseas, many in the USA. Growing domestic affluence, expanding tourism and inter national trade is expected to boost its total air transport market to nearly 17.5 million passengers by 2005, according to Vietnam Airlines projections. In line with the general opening up of the Vietnamese economy, Vietnam Airlines has also undergone reform. In 1993, the carrier was established as a state enterprise separate from the Civil Aviation Authority of Vietnam (CAAV), in a move similar to the break up of China's Civil Aviation Authority into semi- autonomous airline groups. Vietnam Airlines deputy director-general Nguyen Due Vinh explains: "We're still under the control of the CAAV, but we now have more independence and choice to focus our efforts on business and not Government management." The devolution of state authority, however, has only gone a certain way. A recent move by the airline to offset higher fuel charges by rais ing uneconomic domestic air fares by an aver age of 30% was quickly quashed by the Government. Vietnam's prime minister, Vo Van Kiet, has since reportedly ordered an audit of the airline. While Vietnam Airlines is not alone in Asia in having to deal with heavily regulated domestic air fares (Malaysia and Philippines Airlines both face similar problems), it does not yet have a large lucrative international market on which to fallback. Domestic passengers account for nearly 60% of the airline's total traffic, yet fares are kept below any realistic break-even point. On Vietnam Airlines' main trunk route between Hanoi and Ho Chi Minh (a 2h flight) local trav ellers are typically charged $60 one way, com pared to the $170 price imposed on foreigners. "We're the national carrier, and our mission is not only to make a profit, but to serve as a public utility," explains Vinh. "We're allowed to compete with other airlines on international routes, but, for our domestic network, there are certain Government fare controls according to local income levels." REGIONAL DEVELOPMENT Vietnam Airlines operates to 19 international destinations, predominandy in South-East Asia, including Bangkok, Hong Kong, Kuala Lumpur, Manila, Singapore and Taipei. It is within this region that the airline intends initial ly to focus its development, with new routes planned to Brunei and Indonesia. Vinh states: "Our strategy is to integrate within the region, especially with Vietnam becoming a member of ASEAN, which we now consider to be our home market. We aim to 30 FLIGHT INTERNATIONAL 15 - 21 November 1995
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