Vietnam’s private budget carrier planning to fly to PH in 2 years
SEOUL, South Korea – In the midst of the accelerating price of crude oil per barrel in the international market coupled by the fluctuating currency, VietJet Air, Vietnam’s first privately-owned airline, will continue to offer budget fare to its customers.
The budget carrier is also planning to fly to the Philippines possibly in two year’s time.
VietJet vice president Nguyen Thi Thuy Binh gave this assurance in an exclusive interview with Manila Bulletin on the sidelines of the recently concluded World Knowledge Forum here.
Another factor that allows VietJet to keep its budget fare is its modern fleet, which enhances aircraft rate of utilization, otherwise known as aircraft turnaround. Early this month, VietJet has signed and exchanged an aircraft financing agreement with Mitsubishi UFJ Lease & Finance Co. Ltd and BNP Paribas to bankroll the purchase of five aircraft amounting to $614 million from Tolouse-based Airbus.
Specifically, VietJet is acquiring A321neo aircraft that has advanced aerodynamics, which reduce significantly fuel consumption by 16 percent to 20 percent in 2020. The orders will be delivered within this quarter at the earliest or sometime in 2019.
Also, VietJet has placed 100 new aircraft from Washington-state based Boeing to be delivered sometime in the fourth quarter of the coming year.
Embarking on its multi-million dollar modernization program is an integral part of VietJet’s expansion both in its domestic and international operations. This November, VietJet is flying to Osaka, and to Australia in 2019. In the pipeline are Indonesia and the Philippines.
“That’s part of our expansion plan. We’re doing the study of the market. If it will permit us, we want to bring VietJet to the Philippines,” the airline official said.
Nguyen explained VietJet can afford to absorb the incremental cost in jet fuel and foreign exchange differential largely on the account of its “natural hedge” by selling advance tickets to its customers. “We effectively manage our cost.”
For instance, VietJet, Vietnam’s first low-cost carrier, is offering as early as now, tickets for the 2019 Lunar New Year travelers. This natural hedge allows the airline firm to maintain its budget fare without passing on the additional cost brought about by the market developments.
Based on its website, the promotional tickets are applied for all Vietnamese and Thai domestic routes as well as international routes connecting Vietnam and Tokyo, Osaka, Seoul, Busan, Hong Kong, Yangon, Myanmar, Siem Reap, Cambodia with flight period covering January 22, 2019 to February 18, 2019.
Maintaining its budget fare is in keeping with its mission and vision: VietJet’s dream is to give travelers “a chance to fly.”
“We can still manage (additional) fuel cost. Our revenue flow is positive,” she said while admitting that financial and political risks are the top most “challenges” facing airline operations.
Revenues from its auxiliary operations, ranging from fees on seat selection, sale from merchandise, food and beverage as well as travel insurance also helped in the “covering the uptick in fuel cost,” she added. Income from its auxiliary operations contributes 25 percent to its total revenues.