As if meeting technical requirements to fly to the US is not hard enough, the air carrier has to ensure the profitability of those flights. Practices from major world air carriers have shown that they have to compensate for the losses incurred by the US route with earnings from other lucrative ones or from sales and leaseback.
Vietnam Airlines estimated that three to five flights per week to the US would result in a loss of between US$30-50 million per year (according to the exchange rate of 10 years ago) for the carrier. Sources from Boeing also said that 90% of air routes from Asia to the West Coast of the United States cannot earn a profit and must be relieved by those to the US’ East Coast. However, most of the potential clients of Vietnam Airlines are Vietnamese Americans who live in the West Coast.
According to an aviation expert, it will take Vietnam Airlines five years to penetrate the US aviation market while the investments in advertisement and security are huge.
At present, the average ticket price of a mid-range air carrier for the Vietnam-US route is around US$800-900 while that of the five-star air carrier is approximately US$1,100 – US$1,200.
As a result, Vietnamese air carriers plan to sell ticket at prices of under US$1,200. However, the prices are estimated not enough for loss relief.
Recently, Vietnam Airlines has been the first carrier in Vietnam to secure a coveted license to launch flights from Hanoi and the southern business hub Ho Chi Minh City to Los Angeles, San Francisco, New York, Seattle, and Dallas.
The terms, which came into effect on August 26, cover air transportation of persons, property, and mail between the Vietnamese and North American cities.
This is considered a significant move for the air carrier to prepare its plan to launch the direct flights to the US in the future.
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