Vietnamese low-cost carrier (LCC) VietJet Air has flagged the next step in its expansion plans on the back of recent figures showing 182% increase in passenger numbers over the previous 12 months. The carrier said it is looking to extend its roster of international flights, currently restricted to Asian destinations, starting with Russia.
So far, these include Bangkok, Singapore and Seoul, but earlier this month VietJet, which currently operates 15 Airbus A320s, signed a memorandum of understanding with Vladivostok International Airport to set up direct flights from Vietnam to Vladivostok. It has also said it intends to link to the tourist destination at Cambodia’s Siem Reap.
“Our objective is to be a multinational airline with a global product,” VietJet CEO Luu Duc Kanh told ATW. “Our mission is and has been to always expand our network,” he said. What aircraft will be used for these flights is as yet unclear.
VietJet, which carried 3 million passengers in the first six months of 2014, has seen rapid growth since its first flights late in 2011. In 2013 the carrier accounted for 26% of Vietnamese market share, but this was almost entirely on domestic routes. To break out of the relatively fresh local market, the carrier will need to compete with other Asian low-cost carriers (LCC) including AirAsia, Tigerair, Nok Air, Thai Smile and more.
This means a move into the relatively untapped Russia-Asia LCC sector makes sense given the airline’s good links to other onward tourist destinations in Southeast Asia in Thailand, Cambodia, Singapore and Korea.
However, the airline has seen some road bumps recently with a demand from the Civil Aviation Authority of Vietnam to explain why it was taking longer (and cheaper in terms of airspace charges) routes over the South China Sea instead of more direct and fuel-efficient overland routes.
Nonetheless, the carrier is still optimistic it can continue its expansion, and underscored its confidence with one of Airbus’s biggest Asian orders in February this year, signing for 42 A320neos, 14 A320ceos and 7 A321ceos along with an agreement to lease seven more aircraft as part of the deal. It also signed for options on 30 more A320s.
VietJet has also taken a broad-based sales approach, tapping into a nationwide network of cash-capable sales agents and ticket-enabled ATMs to boost sales, as well as offering travel agent incentives and special deals to hundreds of thousands of Vietnamese students.
Kanh said that part of the company’s rapid expansion is due to this sales model, tailored for a developing country’s relatively unbanked and unconnected population. “And we are receiving more brand new aircraft and will configure them according to the market need in line with future business expansion plans,” VietJet business development director Desmond Lin said.