Vietnam’s Bamboo Airways recently ordered 20 787’s for long haul operations, but they won’t be delivered for a couple of years. However the airline sees a major opportunity to move into the US market, having recently received a Category 1 safety rating from the FAA. Discussions are already said to be underway with the US DoT to determine which routes and they’re unlikely to be denied.
Favourites are said to be Denver and Las Vegas, but what seems to have caused controversy in the financial press is that airline wants to lease in A380’s to operate the routes.
While this seems entirely feasible as things stand, as I understand it the neither Hanoi or Ho Chi Minh City airports have A380 stands or are suitable at present for A380 operations, and there’s no business case for the airports to spend millions putting them in. Even less so now that the aircraft is going out of production.
Its arguable that an A380 is even the right sort of aircraft, but I detect a familiar pattern here, one we’ve seen before with other airlines, Skymark in Japan being of note.
A low cost airline wants publicity, it wants to be seen to be serious, it wants to be seen to be different, to push the boundaries, to expand its reach. It’s got financially strong backers and there’s political will in Vietnam to let airlines push forward and take the country out into the world.
However, the same has been said of others. Take WOW, Skymark, Norwegian, Air Berlin and many more. They seize the popular imagination and we want them to succeed, but rarely, if ever do they make it. Some like Hong Kong Airlines, maybe Norwegian rein their ambition in before it takes them down, but most get carried away by their own PR and can’t see the pitfalls. The curse of aviation is that the glamour and the belief that anyone can do it by force of will alone, is where it all goes wrong for so many.
So even allowing for Bamboo to get hold of a leased aircraft, and plenty will start to be available in the coming year or two, can they make such an operation work?
To make it pay they need an operating alliance the other end. They need to be able to fill the return flight. They need feeder flights with someone to draw customers from a wider area. Who in Las Vegas or Denver or wherever else it’s going, will to want to fly direct to Vietnam in sufficient and profitable numbers to make the journey pay? Do they think that 500 Vietnamese are going to want to do it three times per week just to gamble in Las Vegas? Or Ski in Denver in winter?
Airbus is of course in something of a panic over what to do with an incoming haul of used A380’s nobody wants, but are little over 10-12 years old, barely a third of the way through their viable physical lives. And there are a lot of them inbound over the next 4-6 years, as many as 50. That will make lease costs very low as they’ll be cheap because nobody wants them. However to repaint one and refurbish one to a new airline layout or spec is estimated to be around US$30 million at the bottom end of the scale. It’s why BA decided not to go that path, it was too expensive.
Airbus meanwhile is looking at another A340-600 débacle but on a wider scale. Many of the earliest versions of those – barely 12-15 years old have already gone to the scrapyard, despite real efforts to re-market them in 2016-17.
Yet in the end this for Bamboo must be about financial responsibility and not image. Skymark ordered and nearly took delivery of 388 seat A380’s – a ludicrously low seating arrangement, and planed on flying them into LAX – but had no strategy to fill seats on return journeys. There was hardly an analyst to be found who thought these flights would last six months.
Bamboo might well decided to operate a handful of leased A380’s, spend millions on airport facilities for them, but let it only happen fully costed, fully supported and with a workable strategy based on realities, not, as is far too often the case, on management’s wishful thinking.