The time is right for VietJet to start freighter flights

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Vietnam’s fast rising star, VietJet Air is finally about to satisfy its freighter ambitions with two narrow-body freighters due to come onboard in Q2 this year, followed by two more by year end, along with a long-haul freighter partnership and in 2019, medium-body freighters. Donald Urquhart reports from Bangkok.

“It’s urgent, the market develops very fast and we have received many requirements from customers, but we are waiting for delivery,” said VietJet Air’s vice president Cargo, Dô Xuân Quang as he detailed the low cost carrier’s dizzying plans during last week’s Asia Air Cargo Summit 2018 in Bangkok.

The carrier has reached saturation point in terms of its belly capacity on its current fleet of 53 A320 family aircraft and with the booming Vietnamese economy, Quang says the time is right for the freighters.

The carrier’s cargo strategy is a three phased affair, with the first phase seeing the carrier operating a belly cargo operation domestically with some regional operations to Southeast and Northeast Asia over the first few years.

Now entering phase two, VietJet Air will bring in two leased B737-400 freighters in the second quarter this year with two more coming onboard before year-end, Quang said. “We will develop a cargo strategy combining the belly network with the freighters on a point-to-point service,” he added.

These will serve short-haul destinations primarily around the region, including Singapore, Bangkok, and Hong Kong, as well as domestic destinations from its dual hubs of Ho Chi Minh City (SGN) and Hanoi (HAN). Once the next two freighters join the fleet, VietJet Cargo will expand its network to Japan and India. Passenger services to India will begin in the second quarter and to Japan in June or July.

Quang says the primary customers are express courier companies and the post office and the primary cargo will be e-commerce products along with some seafood and valuable cargo as well.

Phase two will also see a collaboration with an operator of long-haul freighters for flights to Europe and the US, Quang said pointing to the likes of Cargolux, Turkish Cargo or Nippon Cargo Airlines (NCA) as examples. He added that no agreements had been reached as yet.

“This would be from the third-quarter this year, maximum fourth-quarter this year. We must fly there because the US is a very important market for Vietnam. About 30 to 32 per cent of Vietnamese exports go to the US,” he said.

Phase three will see the addition of leased medium-body freighters, either A330s or B767s, with which the carrier will open up routes to Dubai, India, Shanghai and Australia. This will likely be in 2019, Quang says, the same time as it begins passenger operations to the US.

The US operations will utilise Dreamliners which will give a belly capacity of around 14 tonnes Quang noted. The US service will operate from SGN to San Jose near San Francisco where there is a very large expatriate Vietnamese community he added.

The carrier’s foray into freighters has clearly not been done on a whim and comes at a time when Vietnam’s economy has been growing at double digits for some time now. The air cargo market has similarly followed with 1.1 million tonnes of cargo in 2016, rising to 1.3 million tonnes last year. The market is forecast to reach 2.5 million tonnes by 2020 at an average growth rate of 12.8 per cent per year.

Much of this is comprised of garments, shoes, electronics, seafood and other perishables and e-commerce. With 52 foreign carriers operating in Vietnam, 17 of them also offer freighter capacity and Quang highlights there is no Vietnamese operated freighter capacity. Roughly 70 per cent of cargo goes in the belly while the remaining 30 is maindeck uplift.

These 17 freighter airlines operate 75 flights a week into SGN and HAN, uplifting more than 7,000 tonnes of cargo, including nearly 1,300 tonnes for Samsung alone, as well as 1,500 tonnes for Microsoft and Nokia per week. And even with all this capacity Quang says there is still a short fall of nearly 150,000 tonnes a year, something he plans to tap.

“We are very successful in passenger operations and for freighter operations this year we will be successful like passenger side.”

And he probably has every reason to be confident. VietJet Air’s success has attracted attention the world-over and clearly help push its valuation to USD1.8 billion last year following its initial public offer (IPO).

That IPO has provided a lot of fuel for further growth and the airline now has orders for 120 more A320/21 and 100 B737MAX. Airbus deliveries are ongoing and from 2019 Boeing will start delivering the B737MAXs.

Going forward Quang said the carrier will set up operations across the region, as it did in Thailand with Thai VietJet.