Vietnam Readies for New Nonstop Routes Between U.S. and Ho Chi Minh City

Direct flights between the US and Vietnam could start as early as this year now that Vietnam Airlines, the government flagship carrier, has received a Category 1 safety rating from the FAA. The announcement comes as Bamboo Airways, the nation’s newest airline began flying last month and may also be seeking clearance to fly the transpacific nonstop route. The smaller carrier expects to sign a $3 billion deal this week to purchase 10 Boeing planes as the U.S. president sits down with North Korean leader Kim Jong Un in Hanoi.

While there are currently no non-stop routes available between the U.S. and Vietnam (United Airlines ceased service in October 2016), the transpacific routes are considered oversaturated and concern about the profitability of such a route has been raised.

“Vietnam Airlines could face an average annual loss of $30 million in the first five years of operation if we open a direct route to the U.S.,” CEO Duong Tri Thanh told local media in an interview last year. However, officials note that the route is expected to become profitable in five years and that there are wider goals afoot focused on growing Vietnam’s tourism economy and trade industries.

Vietnam Airlines currently operates seven flights per week to cities in the U.S. under codeshare agreements with foreign carriers. The U.S. is the fourth largest source of foreign visitors to Vietnam, with more than 614,000 arriving in 2017, up 11 percent from the previous year, according to the General Statistics Office. Most of that passenger load is comprised of students, VFR and leisure travelers.

The airline is looking to put in an order for 50 to 100 Boeing 737 Max planes this year to replace its aging fleet and will likely also buy long-range jets in preparation for flights to California, home to some two million Vietnamese immigrants. The new aircraft will be up for delivery between 2020 and 2030. Vietnam Airlines expects to serve 25 million passengers this year, 3 million more than in 2018.

Vietnam’s government recently approved plans to expand its air network to major markets across Australia, China and Europe as well.  As for the U.S., Vietnam Airlines is expected to start non-stop service from Ho Chi Minh City to San Francisco and Los Angeles by the end of the year.

Meanwhile, large Asian carriers such as Japan Airlines, China Southern Airlines, Singapore Airlines, Malaysia Airlines and Thai International Airways already operate regular flights to the U.S. Malaysia Airlines, Garuda Indonesia, and Thai Airways are also considering new service to the USA.