Vietnam Airlines (Vietnamese: Hãng Hàng không Quốc gia Việt Nam) is the flag carrier of Vietnam. Founded in 1956 under the name Vietnam Civil Aviation, the airline was established as a state-owned enterprise in April 1989. Vietnam Airlines is headquartered in Long Bien District, Hanoi, with hubs at Noi Bai International Airport and Tan Son Nhat International Airport. The airline flies to 52 destinations in 17 countries, excluding codeshared services.
From its inception until the early 1990s, Vietnam Airlines was a minor carrier within the aviation industry as it was hampered by a variety of factors including the socio-economic and political situation of the country. With the government's normalization of relations with the United States, the airline was able to expand, improve its products and services, and modernize its ageing fleet. In 1996, the Vietnamese government brought together 20 service companies to form Vietnam Airlines Corporation, with the airline itself as the centrepiece. In 2010, the corporation was restructured into a limited liability company and renamed Vietnam Airlines Company Limited. A seven-seat management board, members of which are appointed by the Vietnamese Prime Minister, oversees the company.
As passenger transport constitutes its core activity, Vietnam Airlines plays a crucial role in the economic development of the country. It owns 100% of Vietnam Air Service Company – a regional airline in southern Vietnam, 70% of the low-cost carrier Jetstar Pacific Airlines, and 49% of the Cambodian national airline Cambodia Angkor Air. In addition, the corporation earns revenue from airline catering and the maintenance and overhauling of aircraft through a number of its subsidiaries, including Vietnam Airlines Engineering Company and Vietnam Airlines Caterers. The company has also diversified its investments in the aircraft-leasing and airport ground-servicing industries, and is looking to manufacture aircraft components. It controls and operates a cargo division, Vietnam Airlines Cargo.
Vietnam Airlines became a member of SkyTeam in June 2010, making it the first Southeast Asian carrier to have joined that alliance. It is expected to be restructured and partially privatized by 2015 to help it streamline its services and better compete with other airlines. This would facilitate its long-term development plan that involves the improvement of its products and services, and the expansion of its fleet and flight network, as the airline aspires to become the second-largest full-service carrier in Southeast Asia by 2020.
Vietnam Airlines has its origins in January 1956, when it was established by the North Vietnamese government under the name "Vietnam Civil Aviation" following the nationalization of Gia Lam Airport. It was instituted after the government signed the Decree No. 666/TTg. The airline was created as part of the air force for civilian purposes with support from both the Soviet Union and China; initially, its fleet consisted of two Lisunov Li-2s that were later replaced by two Ilyushin Il-14 and three Aero Ae-45s. This was due to an embargo that prohibited the airline from leasing and/or buying American technology or components.
A Vietnam Airlines Tupolev Tu-134 at Don Mueang International Airport in 1992.
The airline's development and expansion was seriously hampered by the Vietnam War (1954–1975). Following the war, its first international destination was Beijing, followed by Vientiane in 1976. During that year, the airline was known as General Department of Civil Aviation in Vietnam, and began full operations; it carried around 21,000 passengers, one-third of whom were on international flights, and 3,000 tonnes (6,600,000 lb) of cargo. In 1978, another important destination of Vietnam Airlines was added, with flights offered to Bangkok. The late 1980s and early 1990s saw the expansion of the network to Hong Kong, Kuala Lumpur, Manila and Singapore.
In 1990, the company initiated discussions regarding the incorporation of Western-built aircraft into the fleet. Later that year, however, the carrier had to cancel the acquisition of two Airbus A310s due to their use of US-manufactured engines. By July 1991, the airline struck a wet-lease agreement with Dutch lessor TransAvia. The aircraft involved was a Boeing 737-300, that arrived in Vietnam Airlines' livery. However, the aircraft was returned after the U.S. State Department pressured the Dutch lessor to remove the aircraft from Vietnam. Subsequently, Vietnam Airlines organized a similar but more complicated deal with TEA Basle, who spent the rest of 1991 negotiating a deal with US authorities. Eventually, a solution stating that "[the Boeing 737] must be positioned outside Vietnam, with no logo or lettering of Vietnam Airlines. On these conditions, it could operate on behalf of Vietnam Airlines" was reached.:26 In December 1991, Cathay Pacific and Vietnam Airlines agreed on a 50–50 joint venture to operate between Hong Kong and Vietnam, as the airline's Tupolev Tu-134 fleet did not meet Kai Tak Airport's noise restrictions.
In October 1992, the Boeing 737 was supplemented with an Airbus A310.:26 However, a dispute with Bulgarian Jes Air over who should pay for the repairs after the aircraft sustained an engine failure led to its replacement with another A310 from GATX, also operated by Jes Air.:26–27 A similar dispute with United Technologies encouraged the airline to switch from Airbus to Boeing. Hence, a Boeing 767-200ER, leased from Ansett Worldwide Aviation Services (AWAS), arrived in January 1993, and a Royal Brunei Airlines Boeing 767-300ER, arrived the following year. In October 1993, the first Airbus A320-200 was incorporated over a two-year wet-lease contract with Air France. Vietnam Airlines by now had started discussions with Air France about a partnership, and the French carrier agreed to lease its Airbuses to Vietnam Airlines, and also to provide customer support and pilot/crew training.:31 By that time the route network had further expanded internationally, seeing the incorporation of destinations such as Paris, Tokyo, Seoul, Taipei, Sydney, and Melbourne. In 1993, the airline carried 1.06 million passengers, 418,000 of whom were on international flights.
New enterprise: 1993–2006
The airline became the flag carrier of Vietnam in 1993, after having completed a restructuring programme that was started four years earlier. In that year, the airline split from the Civil Aviation Administration of Vietnam (CAAV) and became a state enterprise.:30 The move was similar to the reorganization of the Civil Aviation Administration of China into several regional airlines in 1987. Despite the fact that the airline gained some independence from the CAAV, it was still known as Civil Aviation Administration of Vietnam within the 1993–1996 period.
In February 1994, US President Bill Clinton lifted the trade embargo to allow Vietnam Airlines the ability to acquire Western-built aircraft.:26 Consequently, Vietnam Airlines announced in April of the same year that it would be phasing out its inefficient Soviet planes. By April 1995, the fleet consisted of nine Airbus A320s (all of them leased from Air France), 11 Antonov An-24s, four ATR72s, two Boeing 707-300s, three Ilyushin Il-18s, nine Tupolev Tu-134s and three Yakovlev Yak-40s;[nb 1] at this time the route network comprised 14 domestic destinations (including Ban Me Thuot, Da Nang, Dien Bien Phu, Hue, Nha Trang, Phucoq and Pleiku) and 16 international destinations (including Bangkok, Hong Kong, Kuala Lumpur and Singapore).:80 On 27 May 1995, the airline, along with a number of other aviation-related businesses, were incorporated to establish Vietnam Airlines Corporation. Two Fokker 70s were purchased in mid-1995 for US$50 million; they were aimed at partly replacing the Tu-134 fleet on domestic routes as well as at serving as VIP transport. In December 1995, discussions with GECAS for the lease of three additional, second-hand Boeing 767-300ERs were under way; these ex-Continental Airlines aircraft would act as a replacement for wet-leased Boeing 767 aircraft (three -300ERs and one -200ER leased from AWAS and Royal Brunei) in the fleet.
In September 1996, Vietnam Airlines started offering business class services and in 1999, the airline launched its frequent-flyer program, Golden Lotus Plus; During 1996, Vietnam Airlines looked for aircraft which would substitute the A320s wet-leased from Air France when the deal was over. Apart from acquiring further A320s, the airline considered Boeing 737s and McDonnell Douglas MD-90s. In February 1996, GECAS delivered the first of three Boeing 767-300ER to the carrier, on dry-lease for five years. In October the same year, two Boeing 767-300ERs and a Boeing 767-200, on lease from AWAS and Royal Brunei Airlines, respectively, were returned to the lessors, but in early 1997 another Boeing 767-300ER was phased in on a one-year lease from AWAS. With its freedom to operate Western-built aircraft, Vietnam Airlines considered the acquisition of long-haul aircraft to better service Vietnamese living overseas. The Airbus A340, Boeing 747 and the McDonnell Douglas MD-11 were topics of discussion. Meanwhile, two Fokker 70s were acquired in May and July to replace the twelve Tupolev Tu-134s.:31 On 3 September 1997, the crash of a Tupolev Tu-134B, on approach to Phnom Penh 's Pochentong Airport in bad weather, resulted in more than 60 fatalities.
A Vietnam Airlines Fokker 70 at Pochentong Airport in 2004.
A new livery was introduced in early 1998, initially unveiled on a Boeing 767. In December 2001, Vietnam Airlines signed a historic agreement with Boeing for the acquisition of its first ever US-built aircraft, signalling the start of trade under the Bilateral Trade Agreement between the two countries. The deal involved four Boeing 777-200ERs. The transaction was valued at US$680 million; the first aircraft was initially scheduled for delivery in 2003. These four aircraft, along with six others of the same type that are leased from International Lease Finance Corporation (ILFC), are the flagships of the airline, and serve on medium and long-haul routes, respectively.[needs update] During that year, the airline carried 3.4 million passengers, 1.9 million of whom were on domestic flights; flights to Beijing resumed and services to Kunming were launched. During 2002, Vietnam Airlines considered a lease offer from Airbus for two Airbus A340-300s. On 4 September 2003, a landmark ceremony celebrated the airline's receipt of its first Boeing 777-200ER purchased outright from Boeing. On 28 October, the airline decided to move its operations in Moscow from Sheremetyevo International Airport to Domodedovo International Airport.
In June 2005, Vietnam Airlines ordered four Boeing 787-8s. Twelve additional 787-8s were ordered in late 2007, some of them to be directly acquired from the company, and the rest to be purchased by the carrier's subsidiary Vietnam Aircraft Leasing Company (VALC). These new aircraft were to allow Vietnam Airlines to expand its network and replace some leased aircraft. Regarding the delays from Boeing, CEO Pham Ngoc Minh remarked in September 2009, "We are not happy about the constant delays. It affects our business plan. We expected to get our planes in 2009, then 2010, and now nobody can confirm to us which is the exact delivery date. I can be patient but it gives us a lot of headaches." In 2010 the airline switched its Boeing 787 order from the –8 to the –9 model, stating that 787-8s did not meet all the requirements Boeing initially promised; it is expected the airline will receive its first aircraft of the type in 2015.
On 20 June 2005, the airline launched direct services to Frankfurt after having discontinued services to Berlin. It came after the 2004–2005 period when travel between the two countries soared 70%. The following year, Vietnam Airlines was admitted into IATA. As part of the move, Vietnam Airlines had to meet the association's IOSA safety standards.
A Vietnam Airlines Boeing 767-300ER on short final to Kuala Lumpur International Airport in 2003. The aircraft is wearing one of the former liveries.
According to a number of newspaper reports in 2007, the Vietnamese government planned to partly privatize Vietnam Airlines. In the plan, the government considered selling 20–30% of the airline's stake to outsiders, with the government holding the balance. This was a small part of a bigger proposal by the government to privatize its state-owned companies, due to be completed by 2010. Vietnam authorized the plan the following year; however, the plan was not carried out as the airline missed its deadline scheduled by the government, which was arranged for 2010, due to the Global Financial Crisis.
On 1 October 2007, the airline and VALC signed an memorandum of understanding for the purchase of ten Airbus A350 XWBs, and 20 additional Airbus A321s. The Airbus A350s will supplement the Boeing 787s already ordered by the airline. This single order will result in Vietnam Airlines becoming one of the largest Airbus operators in Asia. The two companies also ordered five extra ATR 72-500s in December 2007.
Vietnam was chosen as the host of Miss World's 60th contest in 2008. As the country's national airline, Vietnam Airlines was selected as the sponsoring airline for the beauty pageant. Therefore, it was tasked the job of managing all the transport matters for the contest, to be carried out during September and October, just before the beginning of the competition. However, it was later decided to carry out the event in Sanya, China, following speculations of Vietnam withdrawing. In August 2008, Vietnam Airlines added Nagoya, the airline 's fourth point served in Japan besides Fukuoka, Osaka and Tokyo, to the route network.
In 2009, Vietnam Airlines and the Government of Cambodia established a joint-venture, having 49% and 51% stockholding, respectively, with the goal of boosting tourism in Cambodia. The joint-venture was a new Cambodian national airline named Cambodia Angkor Air, which started flying in July the same year, using ATR-72 equipment; an Airbus A321 joined the fleet in September. Also in 2009, the carrier signed a deal for another 16 Airbus A321s plus two Airbus A350s, during the Paris Air Show. In addition, Vietnam Airlines launched a new bilingual website in October to simplify bookings and adopted a new passenger service system designed by IT provider Sabre Airline Solutions.
A Vietnam Airlines Airbus A321-200 at Singapore Changi Airport in 2010.
On 26 August 2010, the airline teamed up with Boeing during the unveiling of its interior modernization programme to increase passenger comfort. From late September to early October, Vietnam Airlines discounted up to 85% of its 90,000 fares to celebrate Thang Long-Hanoi's 1000th anniversary. In November 2010, the airline awarded Honeywell a US$100 million contract to retrofit the Airbus A321s' aircraft flight systems, which is calculated to save Vietnam Airlines US$10,000 per aircraft per year.
In February 2012, Vietnam Airlines boosted its stake in the low-cost carrier Jetstar Pacific Airlines to 70%, with Qantas holding the balance. The Vietnamese flag carrier was the major shareholder in Vietnam's second largest airline, but its stake had been transferred to the Ministry of Finance, and subsequently to the Vietnamese State Capital Investment Corporation (SCIC). The carrier's takeover of SCIC's stake in Jetstar Pacific will capitalise the low-cost carrier with US$27 million, an amount that will be directed towards fleet renewal. In late April 2012, the aircraft lessor ALC announced the placement of an order for eight Boeing 787-9s, which will be leased to Vietnam Airlines; deliveries are expected to start in 2017. In late May 2012, the carrier signed an agreement with Vietnam's Exim Bank for a loan worth US$100 million, which the carrier will use to finance the acquisition of four Airbus A321s; a further US$100 million was loaned in April 2013 to finance the purchase of eight Boeing 787s. In a deal valued at US$1.7 billion, Vietnam Airlines signed a contract with General Electric in October 2013 for 40 engines to power the Boeing 787 aircraft the airline has on order.
In July 2014, a new route to Tokyo-Haneda from Hanoi was introduced.
As it is expected to be operating 170 aircraft in 2020, Vietnam Airlines is aiming to become the second-largest full-service carrier in Southeast Asia. The airline is interested in launching services to the United States, where more than 1.2 million Vietnamese reside. Such plans have been confirmed in December 2003, but have since been postponed because Vietnam is not yet part of Federal Aviation Administration's International Aviation Safety Assessment Program. Vietnam Airlines also considered "opening new routes such as Ho Chi Minh City/Hanoi, Vietnam–London; Ho Chi Minh City/Hanoi–Shanghai/Beijing, China; Ho Chi Minh City–Mumbai; Ho Chi Minh City–Brisbane; and Ho Chi Minh City–Doha", according to CEO Pham Ngoc Minh in 2008.
A Vietnam Airlines Airbus A330-200 at Tokyo Narita Airport in 2013.
While the airline had launched flights to London-Gatwick, Beijing and Shanghai, there are currently no flights to Mumbai, Doha, and Brisbane. The airline also plans to re-open flights to Berlin, and commence flights to Adelaide, Perth, Amsterdam, Milan, Prague, Mandalay, Dalian, Nanjing, Hangzhou and African cities; by 2020, Vietnam Airlines is expected to serve 53 international destinations, up from 27 in 2011. By 2020, Vietnam Airlines plans to increase its annual revenue to US$7 billion – up from $1.86 billion in 2010 – by carrying 620,000 tonnes of cargo and 35 million passengers, using a fleet of 163 aircraft (later revised to 41 million passengers using 170 aircraft). It aims to capture a 45% market share of Vietnam's aviation market. During its first 15 years of operation, from 1996 to 2010, Vietnam Airlines carried a total of 82 million passengers on 678,550 flights. In addition, Vietnam Airlines plans to transfer most of its international operations from its current hub, Tan Son Nhat International Airport, to the proposed Long Thanh International Airport. With a cost of approximately US$6 billion, the airport will, according to Vietnamese authorities, help Vietnam Airlines boost its operations internationally as it seeks to bypass Thailand as the dominant gateway to the Greater-Mekong region. London operations will be transferred from Gatwick to Heathrow effective March 2015.
In January 2011, plans were announced by the airline to re-initiate an initial public offering (IPO) by the end of 2012; an earlier attempt was stalled by the 2007–2010 financial crisis. Scheduled for mid-2014 after several delays, the IPO and subsequent share-offerings will supply the funds to expand Vietnam Airlines' fleet and network. With the company valued at US$1.5 billion, the government plans to initially keep 75% of the shares. The IPO plan was submitted to the Vietnamese Ministry of Transport in June 2014. Scheduled to commence on 14 November 2014, the IPO has already received two submissions from foreign companies, yet their names have not been disclosed. The corporation will be restructured by 2015 to bring it in line with other state-owned enterprises and to shift its focus away from non-core businesses. Following restructuring, the airline group will consist of Vietnam Airlines itself, as well as three carriers; in total, the corporation will comprise 26 independently audited companies.
Vietnam Airlines Company Limited is a limited liability company wholly owned by the government of Vietnam, having been restructured from Vietnam Airlines Corporation in June 2010.:5 Its role is to provide economic gains to the country, as its tasks, in addition to scheduled passenger and cargo transport, include "responsibility towards labor, contribution to the state budget, and providing chartered flights", according to former CEO Dao Manh Nhung. The airline is headed and overseen by a seven-seat management team, members of which are selected by the Prime Minister of Vietnam. As of June 2014, Pham Viet Thanh was the chairman of the company, whereas Pham Ngoc Minh was the President and CEO, as of March 2014. As of March 2014, the airline branch of the corporation had 10,929 employees. The airline is headquartered in the Long Bien District of Hanoi; previously it was headquartered at Gia Lam Airport in Gia Lam, Hanoi.
In 2009, the airline, Airbus and ESMA Aviation Academy created Bay Viet Flight Training Company to train pilots in the country, with the expectation that up to 100 trainees would graduate annually. In October 2010, the company planned to train 60 pilots in Vietnam during 2011–2012. In 2010, Vietnam Airlines needed 636 pilots, 60% of whom were Vietnamese. It planned to raise that figure it to 75% by 2015, meaning there will be at least 100 new recruits each year from 2010 until 2015. Vietnam Airlines also contracts CAE Global Academy Phoenix in Arizona, United States, to train its cadets.
Portrait photograph of man wearing black suit sitting down at conference table.
Pham Ngoc Minh, President and CEO of Vietnam Airlines during the World Economic Forum in Ho Chi Minh City.
Vietnam Airlines has enjoyed an average of 37% increase in passengers flown per year until 1997, when the Asian Financial Crisis and other contributing causes led to a loss in profits for the airline. Nevertheless, the airline remained profitable throughout the crisis. In 1996, the airline carried 2.5 million passengers, up 18% from 1995. The airline carried more than 4 million passengers in 2002, which is an 18% increase over the previous year. Its cargo traffic also climbed 20% during the same period, resulting in a 2002 profit of US$35.77 million.
Despite the severe acute respiratory syndrome (SARS) outbreak, the airline posted a US$26.2 million profit for 2003. In 2006, it carried 6.8 million passengers (3.7 million international) and earned revenue of nearly US$1.37 billion (first 11 months). Vietnam Airlines carried more than 9 million passengers, of which 4 million were international travellers in 2007, the year which saw the airline earning a gross profit of US$23 million from a revenue of US$1.23 billion. It also transported 115,100 tonnes of cargo. In 2009, the airline's revenue was US$1.3 billion, compared to US$1.56 billion it earned the previous year. During this period, Vietnam Airlines carried 9.3 million passengers. According to Anna.aero, Vietnam Airlines' passenger capacity for 2010 rose 30% over the same period of the previous year. This also coincided with the increase in capacity at Vietnamese airports, at 21%. In 2012, the company's total revenue totalled US$2.4 billion, with profits totalling US$3.3 million. The following year, the carrier posted a US$25 million gross profit.
Vietnam Airlines held about 40% of the market share of international passengers flying to and from Vietnam in February 2012. At the time, Vietnam Airlines controlled 77% share of the domestic aviation market, with 14% covered by Jetstar Pacific. As of December 2012, Vietnam Airlines controlled just below 70% of the domestic market share.
Subsidiaries and affiliates
Vietnam Airlines have traditionally increased flights among Vietnamese cities to cater for the heavy demands brought by the annual Tết celebration. This busy period, which could fall anywhere from late January to mid-February, is Vietnam's most important celebration; hundreds of extra flights are scheduled by domestic airlines during this period to allow Vietnamese to return to their families, often in the rural ares, to celebrate the occasion. In 2010, the airline increased its seat capacity from 45% to 120% on certain domestic routes. In 2011, it increased additional flights on ten routes, adding more than 100,000 seats. About 63,000 of these seats were between the country's capital and Ho Chi Minh City. This represented a remarkable 41% increase against normal days. In 2013, the carrier added an extra 174,000 seats during the celebratory period, of which 82,000 seats were on the trunk route between its primary hubs.
Vietnam Airlines new livery.
As of December 2014, Vietnam Airlines had a fleet of 89 aircraft. Several of these aircraft are leased to Cambodia Angkor Air and VASCO. If these aircraft are not considered a part of Vietnam Airlines's fleet, the Vietnamese carrier operated a fleet of about 77 aircraft with an average age of 5.1 years as of June 2013. The carrier plans to expand its fleet to 110 aircraft by 2015. In addition to its passenger service, the airline also operates an air freight division of Vietnam Airlines Cargo, providing cargo service to destinations in Asia, Europe, North America and Oceania, using its own passenger aircraft as well as partners' planes.
A Vietnam Airlines Boeing 767-300ER wearing the airline's latest livery at Tan Son Nhat International Airport in 2004.
Since its conception in 1956, the airline has operated a wide range of aircraft, including Soviet, American, and European equipment. After having retired all its Soviet-made equipment, the airline currently uses Boeing, ATR, and Airbus aircraft.
Vietnam Airlines had operated the following equipment all through its history:
On selected flights, Vietnam Airlines offers audio video on demand (AVOD) in-flight entertainment via personal televisions. Entertainment options consist of films, games, TV programmes and music. Vietnam Airlines offers two in-flight magazines, Heritage and Heritage Fashion, in addition to other reading material.
Business class is the highest of three cabin classes offered by the airline. As is the case with business class cabins in most airlines, the amenities offered in this class are substantially different from economy class, and more services and products are available. On Boeing 777s, business class seats have a 160 cm (62 in) of leg room, and are able to recline with a pitch of 157°, depending on aircraft. Laid out in a 2–3–2 configuration, each seat is equipped with lumbar support and a 10.4 in (26 cm) personal touch screen, capable of delivering AVOD. Hot meals are offered on flights lasting longer than two hours.
Deluxe Economy class, Vietnam Airlines' equivalent of premium economy, has a wider seat width and legroom compared to Economy with 36–38 in (91–97 cm) of seat pitch and 7 inches of recline, and is laid out 3–3–3. This class is offered only on selected Boeing 777 flights. On flights over 90 minutes, snacks are served; on two-hour plus flights, as in business class, hot meals are served.
Economy class is available on all flights operated by Vietnam Airlines. Seats in this cabin feature seats ranging from 51 cm (20 in) (Airbus A330) to 53 cm (20.9 in) (Boeing 777) in width. Seat pitch on this cabin class is 31–32 in (79–81 cm), while seat recline ranges from 6 to 13°(5-6 inches). Like Deluxe Economy, snacks are served on flights over 90 minutes, with hot meals available on flights that are two hours or more.