Vietnam Airlines is seeking government approval for major expansion initiatives that should see it more than doubling the size of its fleet over the next nine years. The airline's expansion proposals come as the Vietnamese government is preparing to introduce new rules allowing up to 49% ownership of airlines. Some industry observers expect this will lead to the establishment of competing carriers in the coming years.

Vietnam Airlines confirms the carrier has "just submitted a fleet development plan to the government to increase our fleet to 86 planes in 2015".

The airline has been expanding aggressively in recent years and now operates 40 aircraft, 18 of which are owned and the remaining 22 are leased. It already has another 10 Airbus A321s and four Boeing 787s on order and it expects to be operating 56 aircraft by the end of 2010. The 787s will be delivered in 2009 and 2010.

Vietnam Airlines has been discussing a possible follow-on order for 10 more 787s. It has also been considering ordering more ATR turboprops and has said it wants to lease more A330s. It took delivery of its first A330 in October. "Up to 2015, [Vietnam Airlines] will invest in long-range aircraft to operate intercontinental routes," the airline adds.

Many of the carrier's aircraft are leased, but sharp increases in lease rates and difficulty sourcing aircraft is forcing it to turn to other financing methods. The need to add more aircraft has been triggered by strong growth. Last year it carried more than 6 million passengers and it expects to carry around 11 million annually by 2010.

Vietnam Airlines is expected to face new competition at home in the coming years as several groups have reportedly been seeking approval to launch new airlines. Fellow state-owned carrier Pacific Airlines is also planning to become a low-cost, no-frills operator and is seeking foreign investment. It has moved to standardise its fleet to the 737, returning an A320 to its lessor.

Source: Airline Business