Vietnam-US summit brings aviation deals

Lauren Eldershaw
By Lauren Eldershaw February 27, 2019 16:26

Vietnam-US summit brings aviation deals

Vietnam and the US have sealed several aviation deals this week. VietJet confirms additional 100 737Max aircraft order and CFMi Leap1-B engine order; Bamboo Airways orders 10 787-9s; while Vietnam Airlines signed a new MOU with Sabre promising further technological advances.

Vietjet has booked a firm order for 100 additional 737 MAX airplanes, taking its MAX order book to 200 aircraft. The deal includes 20 MAX 8s and 80 of the new, larger MAX 10 variant, and is worth $12.7 billion at list prices. The deal was signed in a ceremony in Hanoi, attended by United States President Donald Trump and Vietnamese Communist Party General Secretary and President Nguyen Phu Trong who joined company leaders, Vietjet President and CEO, Nguyen Thi Phuong Thao and Boeing Commercial Airplanes President and CEO, Kevin McAllister.

“The deal for 200 Boeing 737 MAX airplanes today is an important move for us to keep up with our international flight network expansion plan with a higher capacity, thus offering our passengers with more exciting experiences when being able to fly to more new international destinations,” said Madam Nguyễn Thị Phương Thảo, President and CEO of Vietjet. “I believe that our fleet will have breakthroughs thanks to new-generation technologies, which helps improve flight quality and enhance operational reliability, while reducing operating costs in the future. Passengers will then have more opportunities to fly with reasonable fares. The contract signing ceremony, which is witnessed by the top leaders of Vietnam and the US on the occasion of the US-North Korea Summit in Hanoi, will mark a milestone in the two companies’ growth path.”

“We are pleased to expand our partnership with Vietjet and to support their impressive growth with new, advanced airplanes such as the 737 MAX. We are confident the MAX will help Vietjet grow more efficiently and provide great travel experiences for their passengers,” said Boeing Commercial Airplanes President & CEO Kevin McAllister. “The economic expansion in Hanoi and across Vietnam is impressive. Vietjet and the country’s burgeoning aviation sector are clearly enablers, helping to stimulate travel within Vietnam and connecting Vietnam with the rest of Asia. We are proud to support this economic development, which in turn supports engineering and manufacturing jobs in the United States.”

Boeing will also partner with Vietjet to enhance technical and engineering expertise, train pilots and technicians, and improve management capabilities at the airline and in Vietnam. The carrier already uses Boeing’s digital solutions to optimise its operations, including flight planning & Tech Log Book.

On the same day, Vietjet and General Electric signed a long-term Engine Support Agreement to equip its fleet with LEAP-1B engines, which is valued at US$5.3 billion according to the manufacturer’s list prices. The agreement includes spare engines and support packages to facilitate the airline’s already-ordered new and modern aircraft. The finalisation of the agreement with General Electric brings the total value of signed deals between Vietjet and US companies on this occasion to US$18 billion.

On the same day and with a similar signing ceremony attended by the US and Vietnamese premiers, Boeing and Bamboo Airways confirmed an order for 10 787-9 Dreamliners valued at $3 billion according to list prices.

“We are excited to be adding the new 787 Dreamliner to our growing fleet,” said Trinh Van Quyet, Chairman of FLC Group and owner of Bamboo Airways. “Our long-term vision is to connect Vietnam with key markets in Asia, Europe and North America and the Dreamliner will enable us to launch these long-haul operations. The 787’s superior operating economics and efficiency, as well as the passenger pleasing interior of the Dreamliner, will allow us to successfully grow our business while enabling us to better serve our customers.”

Bamboo Airways, a startup airline founded in 2017, began commercial operations in January, offering flights linking the capital of Hanoi and Ho Chi Minh City with cities in Vietnam. The airline plans on offering up to 40 domestic routes in 2019. Additionally, Bamboo is preparing to launch international service to Thailand, South Korea, Singapore, Japan, Taiwan and Australia, before broadening service to other destinations in Asia, Europe, and North America.

Bamboo Airways is wholly-owned by the FLC Group, a Vietnamese multi-industry company, focusing on aviation, real estate, resorts, farming, and golf.
In a further boost to the aviation industry, Vietnam Airlines and technology provider, Sabre, announced their intention to significantly expand their existing strategic relationship. A new memorandum of understanding (MOU), signed by Sabre and Vietnam Airlines chiefs, witnessed by President Trump and President Nguyen Phu Trong, describes Vietnam Airlines’ intention to significantly expand its existing strategic relationship with Sabre, with a potential value of over US$300 million.

The scope of the signed MOU includes innovative technology from the Sabre AirVision and AirCenter portfolio, that will complement SabreSonic, Vietnam Airlines’ existing Passenger Service System (PSS), which was recently renewed. Together, Sabre’s solutions will help contribute to the carrier’s profitability and digital abilities once implemented, supporting their objective to become a digital airline by 2020.

Leveraging Sabre’s leading Commercial Platform, the MOU contemplates that Sabre’s innovative Sabre In-Flight solution would be the first to be adopted by the airline following this announcement. The solution, which has driven cost savings of up to 10 percent of the total catering budget, would also enhance the airlines’ operational efficiency. Additionally, the MOU contemplates a new, long-term domestic content distribution agreement for Vietnam Airlines through the Sabre Global Distribution System (GDS).

A growing domestic subsidiary of the Vietnam Airlines group would also onboard the SabreSonic PSS under the MOU in an effort to enhance the synergy within the Group. The deal contemplated by the MOU, which is expected in the coming months, would provide a single integrated passenger technology platform across both airlines.

“Vietnam Airlines is pleased to build on the existing agreement with Sabre our trusted, long-term technology provider, to include advanced solutions that will propel our business into the future.  Our Digital Transformation program is essential to our continued success and onboarding these solutions from Sabre directly support our efforts to achieve the Skytrax 5-star status,” said Duong Tri Thanh, president and CEO, Vietnam Airlines. “We are well-prepared for the Industry 4.0 revolution and soon to embark on the ultimate digital journey, providing seamless customer experience and improved operational efficiency,” he added.

“This announcement reaffirms our role as a strategic technology provider to one of the region’s leading carriers, Vietnam Airlines. Over the last year, our alliance has evolved both on the content distribution and airline solutions front, and we look forward to working with the carrier to provide a holistic approach to retailing, distribution and fulfilment,” said Dave Shirk, president, Travel Solutions. “Today’s announcement demonstrates Sabre’s forward-looking approach, and our ongoing commitment to Asia’s continued growth and success,” he added.

Lauren Eldershaw
By Lauren Eldershaw February 27, 2019 16:26