Friday, 16 Nov 2018
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ECONOMY

Air business novice Bamboo Airways yet to receive license to take off

Updated at Tuesday, 06 Nov 2018, 06:21
The Hanoitimes - In June, Bamboo Airways announced it signed a deal worth US$5.6 billion to acquire 20 Dreamliner commercial jets from Boeing after the airlines inked a similar deal costing US$3 billion with Airbus.
Bamboo Airways, the would-be fourth Vietnamese airline, has not received the license to take off due to matters relating to aviation security, Minister – Head of the Government Office Mai Tien Dung said last weekend.
 

 
The Civil Aviation Authority of Vietnam (CAAV) will be in charge of granting the license basing on the Law on Civil Aviation, Dung explained. 

The Government Office is seeking feedback from concerning ministries and agencies before making the final decision regarding this issue in the upcoming regular government meeting, he said. 

Bamboo Airways is a project of FLC Group, a publicly-traded resort and housing developer in Vietnam. The airlines was set up in mid-2017 with registered capital of VND700 billion (US$30.17 million) to offer standard aviation service and budget passenger carrying service. It raised the registered capital to VND1.3 trillion (US$60 million) after a year. 

The carrier targets to run on 24 domestic and 16 international routes by the end of 2023, mainly to destinations where FLC is operating its own resorts, including central provinces of Binh Dinh, Quang Binh, and Thanh Hoa. 

In June, Bamboo Airways announced it signed a deal worth US$5.6 billion to acquire 20 Dreamliner commercial jets from Boeing after the airlines inked a similar deal costing US$3 billion with Airbus. 

The news has surprised aviation industry and international experts. 

Henry Harteveldt, a commercial aerospace analyst at Atmosphere Research, said that the purchase of twenty Boeing 787 airplanes indicated a degree of confidence, some would say arrogance, and a willingness to ignore basic financial planning for an airlines, where you usually buy a few and wait for the market to materialize. “It’s a very bold, very risky move,” he added.  

Vice President and analyst at Teal Group Richard Aboulafia said that a newly-established airline should begin with small airplanes like Airbus’s A320 meanwhile wide-body airplanes built for long-haul flights like Boeing 787 are not suitable. He was skeptical that Vietnam’s aviation market can sustain another airline. 

A local expert told newswire Zing.vn that Bamboo Airways itself may be aware of risks when investing in a large plane fleet, but it may be a necessary move to prove its willingness to start up in the aviation industry.

Bamboo Airways had been expected to take off on October 10, 2018. But the date for the first flight remains uncertain as Minister Mai Tien Dung said that the government will “cautiously consider” granting the license.   

Currently, low-cost airline VietJet Air which debuted in late 2011 holds around 43% of the market share while Jetstar Pacific Airlines, the budget carrier of the country’s biggest carrier Vietnam Airlines, claims over 10% of the market share.  

Some foreign airlines like Malaysia’s AirAsia and some Chinese low-cost carriers are targeting Vietnam’s airline market which sees a growth of more than 20% annually on the back of the country’s growing middle class.
Linh Pham
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