VietNamNet Bridge - Only four out of 21 airports receive small aircraft, while other airports all have been upgraded to receive jet planes. 

VALC (Vietnam Aircraft Leasing Company) has put 5 ATR72-500s worth $48 million, or VND1.08 trillion, up for auction. Vietnam Airlines leased them from VALC as part of its plan to expand the fleet by 2020 approved by the Prime Minister.

Under the aircraft dry leasing contract, Vietnam Airlines will use ATR72s until 2022. However, Vietnam Airlines has decided to give back aircraft before the contract is due this year, because of the ineffective exploitation of small-size aircraft.

Vietnam Airlines previously had advantages in using many different aircraft models, from large ones like Boeing 777-200ER and Airbus 350 to Airbus 320/321 and small-size like ATR72 and Fokker. 

Its ATR72 fleet alone comprises 14 aircrafts, including those it owns and leases, in charge of exploiting air routes to Mekong sub-region and domestic flights which take about one hour.

Vietnam Airlines once held the monopoly in exploiting certain air routes, because the airports could only receive small aircrafts, while Vietnam Airlines was the only carrier which had ATR72 and Fokker. 

Only four out of 21 airports receive small aircraft, while other airports all have been upgraded to receive jet planes.

However, of 21 airports in Vietnam, only four,  Dien Bien, Con Dao, Rach Gia and Ca Mau, receive ATR72 and smaller aircrafts. Therefore, it is unprofitable to maintain ATR72s. 

Except the air route to Con Dao Island which brings high turnover, the other three cannot bring satisfactory profits. Though Vietnam Airlines is the only carrier on the routes, it cannot raise the airfare because of low demand.

Analysts pointed out that ATR72 has lower business efficiency than large-size aircraft. The exploitation cost per hour is $14,000 for B777, $8,000 for A321, and $5,000-6,000 for ATR72. However, the numbers of seats are different - 300, 200 and 68, respectively.

Since most airports have been upgraded, Vietnam Airlines has ATR72 that cannot be used and it has incurred a loss of $10 million from the ATR72 fleet.

Vietnam Airlines has also sold two out of three ATR72s it owns, while it only maintains ATR72s for exclusive air routes exploited for political purposes.

It is foreseeable that both VACL and Vietnam Airlines will bring damages to each side. VALC may not find new business opportunities, while Vietnam Airlines will have to compensate for breaking the contract. 

With the starting price of $48 million for five ATR72s, VALC now finds it difficult to find partners because of the lack of experience and interest from investors.


NLD