Sydney Airport, welcomed (29-Mar-2017) Vietnam Airlines’ new Hanoi-Sydney service with a fitting water salute as the first of the route touched down. The services are expected to deliver an additional 85,000 seats per year to Sydney and generate AUD62 million in inbound visitor expenditure.
The Australia-Vietnam market has largely been dominated by Vietnam Airlines, with the new route being the airline’s third to Australia, after Ho Chi Minh City-Sydney and Ho Chi Minh City-Melbourne services.
Jetstar is set to join the party in June with a launch of services from to Ho Chi Minh from both Melbourne and Sydney. This large – perhaps too large – increase in capacity in 2017 will lead to 24 weekly flights from Australia to Vietnam by Jun-2017, all with 787s, compared to only 14 weekly flights prior to this launch.
Australia to Vietnam – Seats per week, one way
Source: CAPA – Centre for Aviation and OAG
The sudden influx of capacity from Vietnam Airlines and Jetstar, will however inevitably pressure already low yields. Load factors on Australia-Vietnam nonstop flights, which have improved significantly since Jetstar’s withdrawal in 2012, will be pressured. Jetstar Airways has not served Vietnam since 2012, when it dropped its Darwin-Ho Chi Minh service. However, Vietnam is a strategically important market for the Jetstar Group, given its 30% stake in the fast growing Vietnamese LCC Jetstar Pacific. Vietnam Airlines owns a majority 70% stake in Jetstar Pacific and has a codeshare partnership with Qantas, although it will compete with Jetstar in the Australia-Vietnam market.
Despite this, it is clear the Australia-Vietnam market is growing and has tremendous potential. Speaking at the inaugural service’s press conference, Vietnam’s Consul-General, Mr Minh Son Hoang emphasised the strong relationship between the two countries, stating that he is “looking to Vietnam Airlines to be the main driver of this relationship.”
Education is an important driver of tourism
According to Mr Minh Son Hoang, “Australia is the most popular English speaking country for Vietnamese students to complete their degrees, with over 30,000 in Australia at the moment, a third of which are in New South Wales.” Importantly, Sydney Airport managing director and CEO, Kerrie Mather, also highlighted that this extends to the total Vietnamese population living in Australia, where up to 40% reside in New South Wales.
Ms Mather also explored the importance of the Australia-Vietnam market, highlighting that “visitors into Sydney have increased by 11% over the last year.” The services seem to be aimed greatly at the visiting friends and relatives market, however Ms Mather was also quick to point out that “Australians holidaying in Vietnam is also increasing.” No doubt much of Jetstar’s marketing will target Australian travellers.
Vietnam Airlines will utilise Boeing 787-9 Dreamliners for the new Hanoi-Service which includes 28 seats in business class, 35 in premium economy and 211 in economy. The schedule will include three weekly flights on Monday, Wednesday and Saturday departing in the afternoon.