VietJet
Aviation Joint-Stock Co., the budget carrier that began flights in Vietnam last
month, may double its fleet to six planes by the end of the year as it lures
passengers from bus trips taking as long as 40 hours.
The carrier’s 122-seat Airbus SAS A320s are 90
percent full on its first route, Ho Chi Minh City-Hanoi, said Chief Operating
Officer Pritam Singh.
The average fare including taxes is 1.03
million dong ($49) one way, according to the airline. That’s about 25 percent
less than the cheapest ticket offered on Vietnam Airlines’ website.
VietJet also intends to challenge the
state-owned carrier on international services as soon as the third quarter as
an economic growth rate that the government expects to reach 6 percent this
year spurs travel demand. The number of Vietnamese living in poverty declined
to about 11 percent in 2010 from 58 percent in 1993, based on U.S. government
figures.
“The market for a budget carrier has to be
developed, but it’s there -- if they have enough capital and run a good
marketing campaign,” said Paul Stoll, who helped set up the Vietnam Tourism
Association and is the chief executive officer of Celadon International Hotel
Management Joint-Stock Co. Still, “it will be tough.”
Two-Hour
Flight
On the Ho Chi Minh City-Hanoi route, a VietJet
flight takes about two hours compared with 30 to 42 hours by rail and 34 to 40
hours by bus. A one-way rail trip in mid-February costs 486,000 dong for a hard
seat, according to the website of the Hanoi train station. The cheapest ticket
on a bus operated by Vinamotor Investment Joint-Stock Co. is about 400,000
dong.
“Many people think an airplane has to be
expensive, and that a bus will be much cheaper,” said Singh on Jan. 27 by
phone. “We are trying to reach out to this segment, to introduce the idea of
using an airline instead.”
VietJet also intends to start services by
April to Danang, the biggest city in central Vietnam. A Danang-Ho Chi Minh City
bus trip takes about 18 hours, according to bus operator Phuong Trang
Investment Joint-Stock Co.
The carrier, a unit of Hanoi-based Sovico
Holdings, flies from Hanoi to Ho Chi Minh City three times a day. Other
operators on the route include Jetstar Pacific Airlines Joint- Stock Aviation
Co., a Vietnam Airlines-Qantas Airways Ltd. (QAN) venture, and closely held
Mekong Aviation Joint-Stock Co. As the carrier expands overseas, possible
destinations may include Singapore, Kuala Lumpur or Bangkok, Singh said.
The airline, which has leased planes from
Kuwait-based Aviation Lease & Finance Co., expects to be profitable by 2014
and it may list on Ho Chi Minh City’s stock exchange within the next few years,
Singh said. Losses before the carrier breaks even are expected to exceed $10
million, he said.
Bloomberg
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