Its first – and currently only – long-haul service, Hanoi – Prague, begins on 25 October, lacking back from March and condensed in frequency because of COVID-19. It will be operated twice-weekly using its two-class, 294-seat B787-9s.
Bamboo Airways has said it will inaugurate its first Vietnam – US route at the end of 2021 or the commencement of 2022.
This is not the first time that the carrier has stated its purpose to serve the US: it had previously measured beginning it in Q1 2020 using leased aircraft.
But unlike then, it now has its first three B787-9s, which are – for now – primarily operated nationally, clearly sub-optimally.
Its first – and currently only – long-haul service, Hanoi – Prague, begins on 25 October, pushed back from March and concentrated in frequency because of COVID-19. It will be operated twice-weekly using its two-class, 294-seat B787-9s.
Vietnam – USA is an important country-pair with passenger volume not the problem
Ho Chi Minh City – Los Angeles is a distance of 13,146 kilometers, slightly longer than Dallas Fort Worth – Hong Kong. It had an average one-way fare of $421 last year, excluding fuel supplements (add 20%+ each way, kept by airlines) and taxes.
Over 900,000 people flew between Vietnam and the USA last year, according to OAG Traffic Analyzer. Ho Chi Minh City is by far the key Vietnamese city for US traffic.
In distinction, Ho Chi Minh City to Seoul Incheon – a large, highly modest market with six airlines – had an average fare of $184 for 3,555 kilometers.
The problem is not passenger volume, even pre-stimulation from non-stop service. The problem is average fares in themselves and in relation to distance.
Los Angeles is 270% longer than Seoul yet had a 62% lower fare per kilometer.
Outside Vietnam, Taipei – Los Angeles had an average one-way fare of $562.
Ho Chi Minh City – Los Angeles is 20% further than Taipei, yet Taipei had a 60% higher fare per kilometer.
Ho Chi Minh City underperforms from a reasonably low quantity of premium demand, resulting in lower fares, compounded by longer distance.
Even the country’s number-one airport-pair, the 1,155-kilometre Ho Chi Minh City – Hanoi, had an average fare of $94 one-way last year – down 8% YOY. The second-largest, Ho Chi Minh City – Da Nang, had just $52 for 602 kilometers.
Bamboo Airways, a self-described hybrid airline, is – and will likely always be – a predominately domestic operator, and it expects a 30% share of domestic seats by the end of this year.
Big questions remain over its hybrid approach, especially in a market of hyper-competition where 55% of seats now are by LCCs. The impact on yields is obvious – exactly what a full-service, or indeed a hybrid, airline does not need.
Does the USA make sense?
Bamboo Airways should grow quickly yet sensibly while prioritizing global expansion in markets that are unserved or with minimal competition and that have sufficiently high yields.
It should avoid directions that may look ‘attractive’, or with ‘sex appeal’, and instead focus purely on those with strong potential routine. This may rule out the USA, even with highly fuel-efficient B787-9s.