Direct flights to US will be profitable: Bamboo Airways chief

06-Aug-2019 Intellasia | The Saigon Times | 6:02 AM Print This Post

Local carrier Bamboo Airways is expected to launch direct flights from Vietnam to the U.S west coast by the end of 2020, and believes that the flights will generate profits, instead of incurring losses as believed by some carriers.

Trinh Van Quyet, chair of property developer FLC Group, which owns the carrier, told a seminar, entitled “Vietnam-US direct route: Ready for taking off” held on August 1 in Hanoi, that the carrier was determined to be a pioneer in opening the Vietnam-US direct route.

Bamboo has estimated fares to transport passengers from Vietnam to California and San Francisco in the US on direct flights, with roundtrip tickets priced from $1,000 to $1,300 each, equivalent to VND25.3 million-VND30 million. The carrier targets destinations that have large Vietnamese communities, said Quyet.

While launching the direct route may result in the carrier suffering initial losses, becoming profitable in the long-term is not an impossible target, added Quyet.

Breaking down the investment, it may cost the carrier VND113 billion to operate an aircraft on the direct route per month, including VND23 billion for chartering planes, VND61 billion for fuel, VND6 billion in technical costs, some VND1 billion for ground services, and the remaining costs for a variety of other services, Quyet explained.

Accordingly, Bamboo may have to absorb revenue deficits of VND14 billion per month, if it sells roundtrip tickets at $1,000 each (VND25.3 million) for 240 passengers on each flight of an Airbus A350 configured with 280 seats. However, it may generate some VND8.4 billion in profits if it raises the ticket price to $1,300 each.

Notably, given roundtrip tickets priced at $1,100 each, if Bamboo operates direct flights using the 280-seat Airbus A350 with all seats being occupied, for example, it will earn VND6.8 billion in profits. For tickets priced at $1,300 each, the profit will amount to VND28 billion, Quyet said.

The carrier will raise the airfare from $1,100 to $1,300 when the quality of its flight services and human resources on the flights become stable. The planned airfare is still lower than that offered by Hong-Kong-based Cathay Pacific and Japan Airlines, at around $1,600 per round-trip ticket. Thus, airfares will decide whether a carrier will incur losses or gain profits, the FLC leader said.

Speaking at the event, Vu The Binh, vice chair of Vietnam Travel Association, said that although Bamboo is set to be the first Vietnamese carrier to fly directly to the US, it has to weigh the current low volume of tourists travelling from the US to Vietnam.

While the number of international tourists to Vietnam is on the rise, tourists from the US to Vietnam fell in recent years, Binh noted.


Category: Business, Vietnam

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