Budget airlines expanding in Vietnam
As an ASEAN member, Vietnam will implement a strategy on ‘opening the sky’ in 2008. Flying to Hanoi with Tiger Airways' Managing Director Tony Davis, Ryan Declan, owner of leading European air carrier Ryanair revealed his ambitious plan to open branches in Hanoi and HCM City, and then to launch new routes from Hanoi to China’s south as well as Taiwan and Macau.
Similarly, Tiger Airways last week announced the opening of a new route from Singapore to Da Nang with three flights a week, and also a proposed branch there as the Government of Vietnam encourages tourism development in the central region. With the new route opened to Da Nang, Tiger Airways has completed their expansion into three regions in Vietnam after one year. The air carrier is planning to offer seven flights a week from December 19. Flight frequency was raised to six flights a week in November. Currently, two of the four main Tiger Airways’ ticketing agents in Asia are located in Vietnam. Tiger Airways is one of the largest airlines in Asia with the operation model being reproduced from Ryanair in Europe.
Budget airline Thai Air Asia, after launching a new route to Hanoi in mid October, decided to take one flight a day with Boeing 737-300, and is now planning new programmes within the market. 20 international air carriers now exist in Vietnam; however, budget carriers remain an unexploited market. Other airlines in the region are seeking entry to the market as ASEAN is implementing a ‘sky opening plan’ by 2008. By that time, air carriers will have the right to fly to any airport provided that their plans are informed in advance.
Meanwhile, Vietnam Airlines seems to be keeping out of budget flights. Pacific Airlines once nurtured a plan on budget airlines when it cut expenses and the meal on HCM City – Da Nang flights; however, after the air carrier was restructured, their plan on budget tickets has become more distant. According to the carrier’s Director General Nguyen Xuan Hien, Vietnam Airlines will begin a project on budget tickets in 2007.
The presence of budget carriers has created pressure on traditional airlines, proven by the fact that carriers developing the Vietnam – Singapore route have had to launch promotional campaigns, offering a 50% price reduction since the appearance of Tiger Airways. The ‘landing’ of budget air carriers to Vietnam has just begun.
Thanh Nien - November 29, 2005.
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