Vietnam's air carriers rush to buy new aircrafts

FLC Group has signed an MOU with Airbus on the purchase of 24 A321 Neos worth $3 billion in preparation for Bamboo Airways’ take-off, slated for 2019.

Zing News cited Planespotter as reporting that for Vietnam’s air carriers, A320s and A321s are favorite choices and they are the most popular aircraft in Vietnam. 

Vietnam’s air carriers now own 124 A320s and A321s which account for 77 percent of operational aircraft in Vietnam. 

Experts say A321 Neo is the latest-generation model of the A320 family which can carry up to 240 passengers. Utilizing modern technology, A321 Neo can save 20 percent of fuel, thus allowing non-stop flights with the distance of up to 4,000 miles.

Vietjet is also using A321 Neo as the major force serving long-distance flights to East Asian countries such as South Korea, Japan, China and Asia Pacific.

Newcomer Bamboo Airways and other airlines have also rushed to buy new aircraft to restructure their fleets and expand operation.

In 2017, the nation’s flag air carrier Vietnam Airlines purchased 18 aircrafts, while Vietjet bought seven.

In July 2017, Vietjet reached financial agreements to fund its plan to buy seven more A321s. 

Also in 2017, the air carrier received 10 A321s it ordered in the years before, which helped it expand in the domestic market. The airline now owns 12 aircraft, and chartered 37 with the average usage time of three years.

Jetstar Pacific for the first time received deliveries for a contract signed in June 2016.

Vietnam is one of the world’s fastest growing aviation market with the average growth rate of 17.4 percent in the last 10 years, far higher than the 7.9 percent of Asia-Pacific. 

The high growth rate is attributed to the increasingly high number of domestic and foreign travelers, up by 19.35 percent and 29.06 percent, respectively in 2017.

Analysts commented that Bamboo Airways, like Vietjet, may apply the ‘sale and lease back’ method after getting deliveries so as to ease the financial burden. 

However, they think the discount rates offered by aircraft manufacturers to Bamboo would not be high because Bamboo is a new arrival in the aviation market.

Sources said Air Asia, the biggest LCC in Malaysia and the second biggest in South East Asia, has nearly completed necessary procedures, and is planning to operate by the end of 2018. Lion Air is following procedures to enter the Vietnamese market.

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