Vietjet lands largest ever deal in Vietnam’s aviation history

The highly efficient fleet will trim Vietjet’s fuel costs and emissions

Landmark agreements

On May 23, Vietjet Aviation Joint Stock Company and Boeing finalised an order for 100 new 737 MAX 200 airplanes, which was witnessed by Vietnam State President Tran Dai Quang and US President Barack Obama.

The order, valued at approximately $11.3 billion, is the largest ever single commercial airplane purchase in Vietnam’s aviation history.

“Boeing is very proud to once again play an integral role in advancing Vietnam’s aviation industry. We’re honoured to be joined by President Tran Dai Quang and President Obama for this historic occasion,” said Boeing Commercial Airplanes president and CEO Ray Conner, at the signing ceremony.

“Incorporating the latest design and technological features, the highly efficient 737 MAX will provide Vietjet’s growing network with market-leading economics, a superior passenger experience and contribute significantly to their future success,” he said.

The 737 MAX incorporates the latest CFM International LEAP-1B engines, Advanced Technology winglets and other improvements to deliver the highest efficiency, reliability, and passenger comfort in the single-aisle market. The new airplane will deliver 20 per cent lower fuel use than the previous Next-Generation 737s.

“Vietjet is efficiently operating a fleet of narrow body airplanes. Our investment in a fleet of B737 Max 200s will accomplish our strategy of growing Vietjet’s coming international route network, including long- haul flights. Through this agreement, Vietjet will contribute by increasing bilateral trade turnover between Vietnam and the US, as well as contributing to the integration and development of the aviation industry of Vietnam,” said president and CEO of Vietjet Nguyen Thi Phuong Thao.

The airplanes will be delivered to Vietjet from 2019 until 2023, supporting the company as it continuously extends its domestic network, as well as its international network.

On the same day, Vietjet also signed an agreement with Pratt & Whitney of United Technologies Corp. for the supply of aircraft engines to power the airline’s newly ordered A320NEO and A321NEO aircraft as well as technical and maintenance services for this fleet.

The event followed the signing of a memorandum of understanding between Vietjet and Pratt & Whitney at the Singapore Airshow held in February 2016. Pratt & Whiney won the international bid to become the engine provider for Vietjet’s fleet. Their engines allow the carrier to enjoy greater operational efficiency while offering 17 per cent lower fuel consumption for all flights. This not only brings forth economic efficiency, but also significantly reduces the carrier’s carbon footprint.

The start of a new era

The agreements between Boeing and Vietjet, and between Pratt & Whitney and Vietjet not only have significance for the respective companies – they are also milestones in the long period of co-operation between the two countries in air travel.

At the moment there are many programmes that related US government agencies are carrying out to improve the capabillity of the Civil Aviation Authority of Vietnam in managing the sector. There will be programmes to evaluate Vietnamese airlines to see if they meet the requirements to fly directly to the US. The two governments also have plans to develop the Vietnamese air travel sector through training programmes and co-operation in research in order to create a generation of specialists in air travel in fields such as air traffic control and technical management.

The agreement is also a big step forward in the development of Vietnam’s air travel sector.

The government of Vietnam currently has plans to develop airports in the country from now to 2030. Initially, the government will increase the capacity of its main airports (Tan Son Nhat International Airport in Ho Chi Minh City, Noi Bai International Airport in Hanoi, as well as the international airports in Danang, Cam Ranh, and Haiphong) in order to meet the increasing demand for air travel from Vietnamese as well as international visitors to Vietnam.

In addition to the financial support, when an airline buys Boeing aircraft the American aircraft producer also provides technical support including training for pilots, air stewards, and flight operation officers, as well as programmes that support the maintenance and management of the aircraft, technologies, and software to ensure the airline operates its new fleet safely. As a result, Vietjet will not only have a new fleet but also upskilled human resources and state-of-the-art technology to help it improve the quality of services to better meet the demand of flyers. By extension, the capacity of Vietnamese airlines will also improve.

With the recent aircraft purchasing agreements, Vietnamese airlines have in their hands a fleet of between 300 and 400 aircraft. With this fleet, Vietnam’s air travel sector reaches an international scale, ranking alongside countries like Singapore, which has ten airlines and a fleet of 200 aircraft (not including the ones the airlines have already signed purchasing agreements for but have not received), Thailand with between 300 and 400 aircraft, and Malaysia with 300 aircraft. Today, Vietnam has increased importance in trade associations, international agreements, as well as investment, finance, and industrial production in the global marketplace.

From now on, Vietnamese airlines will be instrumental in seeking the solution to problems facing the air travel sector, such as those regarding the country’s air travel infrastructure and regarding the state’s control of the sector and its related services.

“With the current government’s openness, the airline sector will see significant improvements in air travel infrastructure and policies governing the sector,” said CEO Nguyen Thi Phuong Thao.

The airlines will also increase their international reach through co-operation – providing aircraft and technologies to other countries. The Vietnamese fleet will not only be used in Vietnam but also in other countries too.

“When Vietnamese airlines have modern aircraft with low operational costs, as well as technology and good governance to keep their costs down, while maintaining safety and high quality services, we can fully transfer the technology and the management know-how to airlines in other countries too,” Thao said.