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Background of Vietnam Airlines

The history of Vietnam Airlines dates back to January 1956 , when the Vietnam Civil
Aviation Department was established by the Government, marking the birth of the civil aviation
industry in Vietnam. At that time, the fleet was small with only five aircraft of IL-14, AN-2,
Aero-45 which started to serve domestic flights in September 1956.
The new stage with the operation
April 1993, Vietnam Airlines was officially established as the countrys national flag
carrier. On the 27th May 1995, Vietnam Airlines Corporation was born with the gathering of 20
aviation enterprises and the airline itself as the core business.
In June 2010, Vietnam Airlines joined SkyTeam, the worlds second largest global airline
alliance, affirming the carriers new position on the global aviation map as the strategic partner
of the alliance in Southeast Asia region as well as its international standard services.
VietNam Airlines also shows the ambition to become a leading brand by signing 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 the future
Positioning its internationally recognized brand as a young and modern carrier, Vietnam
Airlines excelled further when signing large purchase orders of worlds most modern,
environment-friendly aircraft, such as Boeing B787 and Airbus A350-900. The airline is
expected to reach 101 and 150 modern aircraft in 2015 and 2020, respectively, making solid
steps integrating into the global aviation industry as one of leading regional carrier, which is
fully ingrained with Vietnamese traditional culture. Vietnam Airlines want to become one of the
biggest full service carriers in South East Asia and to expand the influence in Viet Nam with the
opening of new routes to compete with other in Viet Nam market.

Operation of Vietnam Airlines


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 July 2015, 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.
Vietnam Airlines Company Limited is a limited liability company wholly owned by the
government of Vietnam. In 2015 VietNam Airline have been restructure by the gorverment to
have higher economic benefits to country. As the report of Vietnamnet, the Government will
reduce its stake in the airline from 70-80 percent to 65-70 percent after the company issues its
IPO this year as expected. With the restructuring Vietnam Airlines consist of 26 audited company
The mother corporation will hold a 100 percent stake in Vietnam Airlines Engineering Company
(VAECO) only, while owning half of the registered capital of 14 companies and less than 50
percent of registered capital in the 11 remaining companies.
After finishing the restructuring plan, Vietnam Airlines will comprise four airlines: the
mother corporation, Vietnam Air Services Co (VASCO), Jetstar Pacific (a low-cost airline) and
Cambodia Angkor Air.
.

PRINCIPAL
COMPANY

TYPE

ACTIVITIE
S

Vietnam Air

Subsidiar

Passenger

transport

Airlines

Subsidiar

Aircraft

Engineering

maintenance

Service
Company

GROUP'S
INCORPORATE

EQUITY

D IN

SHAREHOLDIN
G

Vietnam

100%

Vietnam

100%

Catering

Vietnam

100%

Catering

Vietnam

100%

Vietnam

70%

Cambodia

49%

Vietnam

20%

Vietnam

Company

Vietnam
Airlines
Caterers

Noibai
Catering
Services

Subsidiar
y

Subsidiar
y

Jetstar Pacific

Subsidiar

Passenger

Airlines

transport

Cambodia

Joint

Passenger

Angkor Air

venture

transport

Vietnam Air

Joint

Aircraft leasing

Leasing

PRINCIPAL
COMPANY

TYPE

ACTIVITIE
S

Company

GROUP'S
INCORPORATE

EQUITY

D IN

SHAREHOLDIN
G

venture

Vietnam Airlines Destination, Alliances and Codeshare Agreements

Vietnam Airlines has a flying network within East Asia, Southeast Asia, Europe and Oceania.
With about 300 daily flights, the airline flies to 21 destinations domestically, and to 28
internationally.
Vietnam Airlines has join the Sky team in 2010 which help them have the relationship with

Air France (SkyTeam)

Delta Air Lines (SkyTeam)

China Airlines (SkyTeam)

Alitalia (SkyTeam)

Garuda Indonesia (SkyTeam)

Royal Dutch Airlines (SkyTeam)

China Southern Airlines (SkyTeam)

China Eastern Airlines (SkyTeam)

Czech Airlines (SkyTeam)

Vietnam Airlines also establish the network with

Cambodia Angkor Air

VASCO

Cathay Pacific (Oneworld)

Lao Airlines

Japan Airlines (Oneworld)

Philippine Airlines

Jetstar Pacific Airlines

Etihad Airways

El Al Israel Airlines

Fleet and Service


VNA has reported that Vietnam Airlines had a fleet of 99 aircraft (Dec 2015). Some of aircrafts
are leased to Cambodia Angkor Air and VASCO. 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.
VNA Fleet
Order

Passengers

Routes

Notes

2
9

ATR 72500

45

23
1
Short-haul

16

66

66

international and
domestic

2
5
Boeing
777-

200ER

5
4

15

787-9

7
3

Boeing

54

22

2 35 21
8

8
Total

99

Long-haul
309

two on lease from


VASCO

international and

AVOD in-flight
entertainment.
To be phased out by
2018.

325
274

2 28

Cambodia Angkor Air;

307

domestic
29

Two aircraft leased to

311

Long-haul

5 remaining orders from

international

Boeing plus 11 to be
acquired through leasing
companies

25

https://www.vietnamairlines.com/vi/about-us/our-story/history in 2015
Beside the quality of Fleet, VNA also offer service to their consumer to serve them with
the highest effort for the satisfaction.
Business class. 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 232 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. Deluxe Economy class, Vietnam Airlines' equivalent of premium
economy, has a wider seat width and legroom compared to Economy with 3638 in (9197 cm)
of seat pitch and 7 inches of recline, and is laid out 333. 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. 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 3132 in (7981 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.
Vietnam Airlines records 12% passenger growth in 2015
Vietnam Airlines carried 17.6 million passengers in 2015, making it the third largest full
service carrier in Southeast Asia after Garuda Indonesia and Singapore Airlines.
Passenger traffic was up almost 12% compared with 2014, and has nearly doubled since 2008.

Vietnam Airlines annual passenger traffic and year over year growth: 2008 to 2015

Source: CAPA Centre for Aviation and company reports


In 2015 Vietnam Airlines took delivery of three A321s, along with five 787-9s and four
A350-900s, according to the CAPA Fleet Database. But the 787-9s and A350-900s have been
used primarily as replacements, with Vietnam Airlines removing three A330-200s and three 777200ERs from service.

Jetstar Pacific Airlines


Vietnam Airlines is said to be account for 69.93% share of Jetstar Pacific Airlines which
mean that Vietnam Airlines hold the majority of share of Jetstar Pacific, and became the biggest
Shareholders of Jetstar Pacific (2012). But the fact that though the operation of Jetstar Airlinesthe carrier offer the cheap price for every flight, the report of their operation is always lost and
have not recognize any profit until April 2016 Jetstar is reported that they have earned 267
million VND for their performance in 2015. The Investment of Vietnam Airlines in Jetstar
Pacific Airlines that bring the improvement in their operation and gain the profit after 8 years
only has loss.
For domestic expansion, Vietnam Airlines relying more on LCC subsidiary Jetstar
Pacific. Across its other main international markets, Vietnam Airlines seat capacity is up by
about 31% year over year to Taiwan, by about 26% to Thailand, by about 7% to South Korea and
is roughly flat to Cambodia and Singapore.
Domestically, Vietnam Airlines capacity is currently up by about 17% compared with
Jan-2015, but as CAPA has previously highlighted, Vietnam Airlines has been the slowest
growing of Vietnams three domestic carriers. Privately owned LCC VietJet has grown at a rate
of about 80% over the last year, and is on track to surpass Vietnam Airlines as the largest
domestic carrier in 2016.
Vietnam Airlines Group will remain the largest domestic player when including the
capacity provided by LCC subsidiary Jetstar Pacific, which has accelerated expansion
significantly over the last year.
Jetstar Pacific has increased domestic capacity by almost 70% compared with Jan-2015,
and is planning further rapid domestic expansion in 2016. The LCC now codeshares with

Vietnam Airlines and has taken over several secondary domestic routes from its full service
parent, while adding capacity on trunk routes where there is a significant presence from both
Vietnam Airlines Group brands.
Market Share and Competitors
For the long in Vietnam Airlines is the dominant carrier in Airline market of Viet Nam
base on the government help and the reputation of the firm that have built up for a long time.
From 2010 up to now, with the arrival of new carrier to Viet Nam market that cause a serious
damage to Viet Nam Airlines. The new competitors of Viet Nam Airline appear with the diffreent
startegy and different target costumer when comparing with Vietnam Airlines, which cause the
loss in their market share.

For 2015 and beginning of 2016 VietNam Airlines account for about 44% of domestic
market share, 41% belong to Vietjet Air and the 15% is belong to Jetstar and Mekong Air. We
can see clearly that Vietjet air now become the biggest competitor to Vietnam Airlines, Vietjet
just appear in 2010 and growth fast to compete with Vietnam Airlnes in domestic market. For the
international market Vietnam Airline hold the majority of 70% of market share and their 1/3 of
income come from the international market.
VietJet Air
With an IPO expected in 1H2016, Vietnamese privately owned low cost carrier VietJet
Air is planning more rapid expansion for 2016. This will result in further domestic market share

gains and a larger international network. VietJet has quickly captured a 40% share of Vietnams
domestic market, and will likely surpass Vietnam Airlines in 2016 as Vietnams largest domestic
carrier.
International expansion has been modest in VietJets initial four years, as the LCC has
recognised that there are bigger and less risky opportunities domestically. Nevertheless, VietJet
will continue to build up its international operation gradually in 2016, including the Feb-2016
launch of Hanoi-Taipei, which will become its eighth scheduled international route.
Faster international expansion is expected in the medium to long term, possibly using
widebody aircraft, as the domestic market will eventually become saturated. A new reservation
system that VietJet plans to decide on in 2016 will enable the LCC to start pursuing transit
traffic, providing an important new source of international traffic as VietJet steps up marketing
activities overseas.
Challenge
Although Viet Nam Airline achieve large revenue and profits in 2015 there are challeges
for Viet Nam Airline. In domestic market, VietJet could overtake Vietnam Airlines as Vietnams
largest domestic carrier in Mar-2016 and expand to international market.
As CAPA outlined in a 2-Jan-2016 report on the overall Vietnamese market, VietJets total seat
capacity is currently up 74% year over year to about 261,000 weekly seats. This includes an 82%
increase in the domestic market to about 242,000 weekly seats, and a 30% increase in the
international market to about 19,000 weekly seats. Only about 7% of VietJets seat capacity is
currently allocated to the international market.
VietJet is planning further domestic expansion in the coming months, which will see it
surpass Vietnam Airlines as the largest domestic carrier. Based on forward schedules from OAG,
VietJets domestic capacity will reach almost 259,000 weekly seats in Mar-2016, which
represents a 7% increase compared to current levels, and a 73% increase compared to Mar-2015
(therefore keeping up its current very high year over year expansion rate).
Based on forward schedules currently on file with OAG, VietJet will have more domestic
capacity in Mar-2016 than Vietnam Airlines, for the first time in its history. (Vietnam Airlines

could still potentially add capacity to its Mar-2016 schedule, as Vietnamese carriers often make
last second adjustments.)

Note: VietJet launched in Dec-2011 but capacity data is only available from May-2012
Source: CAPA Centre for Aviation & OAG
Based on the current schedule for Mar-2016, VietJet will have about a 43% share of domestic
seat capacity compared with 42% for Vietnam Airlines, and 15% for Vietnam Airlines LCC
subsidiary Jetstar Pacific. Currently VietJet has about a 40% share compared to 45% for Vietnam
Airlines and 15% for Jetstar Pacific.

1.

Nguyen, Binh (25 June 2010). "Vietnam Airlines becomes limited liability company".
The Saigon Times Daily. Archived from the original on 22 May 2012. Retrieved 22
May2012. In its Decision 952/QD-TTg dated 23 June 2010, the Government says it still
owns Vietnam Airlines Company Limited (Vietnam Airlines), which is headquartered at
200 Nguyen Son Street in Long Bien District, Hanoi City.

2.

"Profile on Vietnam Airlines". Centre for Aviation. Archived from the original on 2
October 2012. Retrieved 2 October 2012.

3. "Vietnam Airlines". Centre for Aviation. Archived from the original on 17 July 2012.
Retrieved 17 July 2012.
4. "Our Background". Vietnam Airlines. Archived from the original on 6/2016
5. Finacial report of Vietnam Airlines from Vietstock

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