European airlines cannot fly high in Vietnamese sky
VietNamNet Bridge – With their low-airfare policies, air carriers from the Middle East are proving to be formidable rivals to Air France, Vietnam Airlines and other Asian airlines in the Vietnamese market.
Peter Hieu, a Vietnamese German, said he was crestfallen when he learned that German air carrier Lufthansa had ended its flights to Vietnam on March 25. “The promotion campaigns run by the air carriers from the Middle East have made Lufthansa shrink back,” Hieu commented.
European airlines retreat
Lufthansa made its public debut in Vietnam very early, in 1991, when the country’s commercial aviation market was in its infancy.
The airline might then have believed it had a bright future in Vietnam. However, after a quarter century of flying between Frankfurt and HCM City, it has finally had to bid “auf Wiedersehen” to Vietnam
Lufthansa’s notice said its representative office in HCM City would shut down soon, while the booking unit would remain in operation to provide air tickets for flights from Bangkok and Singapore to Germany. However, the unit will be smaller, and will relocate to a new office with lower rents.
According to Vo Huy Cuong, Deputy Head of the Civil Aviation Authority of Vietnam (CAAV), the departure of Lufthansa was anticipated. The carrier had failed to submit a summer flight schedule to CAAV six months ago as required.
Cuong declined to comment on Lufthansa’s business performance. However, he said that the national flagship carrier, Vietnam Airlines, continues to find its flights from Hanoi and HCM to Frankfurt profitable, and is even considering providing more flights on those routes.
As for Lufthansa, flights were offered between Frankfurt and HCM, with transit in Bangkok. It had once tried to improve its business operation by putting the Airbus A340-600 into operation. It also tried to fly from Munich, instead of just Frankfurt, to HCM City.
Despite these efforts, the Vietnamese market has proven too challenging for the German airline.
The departure of Lufthansa, some say, demonstrates once again that Vietnam is just not a promising port of call for European airlines. The German carrier is just the latest in a series of foreign airlines who have had to throw in the towel on Vietnam. Past casualties have included KLM Royal Dutch Airlines, Austrian Lauda Air, Swissair, Ukraine Aerosvit and Russian S7.
Analysts said Lufthansa’s story seems to be similar to that of KLM, which also gave up on Vietnam after a five year (1993-1998) presence. Despite its efforts, KLM was never able to develop its HCM City-Amsterdam route into a profitable operation.
And with the exit of Lufthansa, Air France now stands as the sole European representative in Vietnam-bound aviation. The French carrier began operating in Vietnam in the years prior to 1975, when the war ended. It now provides four flights a week between Paris and HCM City.
The Middle East’s airlines arrived
According to Hoang Anh Tuan, former Marketing Director of Lufthansa Vietnam, the German air carrier took a loss in Vietnam because it could not compete with airlines from the Middle East, which consistently offer low fares. At some points in time, Emirates, Qatar and Etihad airlines charged only $900 for a one-way return ticket to HCM City – Frankfurt. At the same time, Lufthansa’s airfares held fast at $1,200-1,300.
All three Middle Eastern airlines have daily flights to HCM. Qatar also flies a daily route between Doha and Hanoi.