LDN - Business

Vietnamese airlines granted access to U.S. market for first time

[February 15, 2019] By David Shepardson and Mai Nguyen

WASHINGTON/HANOI (Reuters) - Vietnamese airlines will be able to fly to the United States and codeshare with American carriers after the U.S. Federal Aviation Administration declared the Southeast Asian country complies with international safety standards.

The U.S. aviation safety agency said in a statement late on Thursday that it was awarding Vietnam a "Category 1" rating, two weeks after Reuters reported the decision was expected.

"It's recognition by a very developed aviation authority which requires a very high standard of safety and security," Vietnamese Deputy Transportation Minister Nguyen Ngoc Dong told Reuters on Friday.

There are currently no non-stop flights between Vietnam and the United States, despite a large market catering to tourism and visits by friends and relatives. Vietnam Airlines JSC, Bamboo Airways and VietJet Aviation JSC desire to fly to the United States.

Bamboo Airways Chairman Trinh Van Quyet said Bamboo was considering destinations such as Seattle, Los Angeles and San Francisco, with the first route to open in late 2020 or early 2021. His airline has ordered 20 Boeing Co 787s for long-haul flights.

CAPA Centre for Aviation Chief Analyst Brendan Sobie said the FAA rating was important for Vietnam symbolically and politically.

But he said Vietnamese airlines could struggle to make U.S. flights profitable because of the lack of demand from high-paying business travelers.

"For Vietnam Airlines, launching routes to the U.S. is our political responsibility as a national airline. Whether or not the route is commercially feasible depends quite a lot on technical issues and aircraft," the airline said in a statement.

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Passengers walk to a an aircraft for a flight from Hanoi to Ho Chi Minh city at Noi Bai International airport in Hanoi, Vietnam, January 12, 2018. REUTERS/Kham

Vietnam Airlines said it was in talks with Airbus and Boeing about potential jet purchases for the U.S. route, but the earliest they were expected to arrive was in 2022. In the meantime its existing codeshares with Delta Air Lines could be expanded after the rating.

Budget carrier VietJet said it plans to purchase wide-body jets capable of non-stop U.S. flights and believes its experience in keeping costs down will give it an effective business model.

"We plan to open routes to cities with Vietnamese communities living in the United States such as in California, serving the large traveling and commercial demand from customers," VietJet's vice president To Viet Thang said in a statement.

The FAA last year sent a team to Vietnam to conduct a safety assessment.

Vietnam's rapidly growing aviation market saw traffic increase 16 percent on average each year from 2010 to 2017, government data shows.

Its airlines are major customers of Boeing and Airbus SE.

(Reporting by David Shepardson in WASHINGTON and Mai Nguyen in HANOI; Additional reporting by Khanh Vu in HANOI and Jamie Freed in SINGAPORE; Editing by Christopher Cushing and Stephen Coates)

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