Viewpoint

Boeing muscles in on Airbus-VietJet romance

Communist-led Vietnam is one of the toughest markets for privately-owned airlines to succeed in, but any that do are rewarded with a benign competitive landscape.

Since its launch in 2012, Ho Chi Minh-based VietJet Air – Vietnam’s sole remaining private operator – has secured one-third of the domestic market from state-controlled Vietnam Airlines and taken its fleet to more than 20 young A320 aircraft.

Capacity and cost discipline have made it the eight-largest budget airline in Southeast Asia, a ranking set to improve as more A320s and an order for 42 A320neos roll off the production line.

Thus far, then, VietJet has followed the path trodden by other success stories in the region such as AirAsia, Lion Air and Cebu Pacific. So what to make of yesterday’s baffling “memorandum of collaboration” with Boeing, which the US manufacturer clearly sees as a precursor to 737 MAX sales?

“We look forward to providing VietJet with the very best airplanes in the world such as the 737 MAX and growing this relationship for many years to come,” said Dinesh Keskar, SVP Asia Pacific and India Sales, Boeing Commercial Airplanes.

Almost no successful low-cost carrier, bar those transitioning their fleets, operate Boeing and Airbus narrowbodies in parallel, as a single aircraft type means savings on training, maintenance and purchasing.

Indeed, VietJet agreed the Boeing memorandum on the same day that it signed an A320 parts supply deal with Honeywell, and the carrier’s commitment to its large A320neo order appears solid.

Any 737 MAX deal would be a coup for Boeing, whose 737 MAX is being outsold two to one by the A320neo in Asia, but beyond pressuring Airbus for more favourable terms, it’s hard to see why VietJet would pursue this.

More logical would be an order for 787s to back international expansion, were it not for the fact that VietJet recently ruled out adding long-haul services for at least three years.

Another stumbling block could be efforts to dismantle export credit in the US; VietJet reportedly wants European export credit for one-third of its Airbus order.

Any suggestions, then, for VietJet’s flirtation with Boeing?

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