The Thai budget carrier has stopped its two daily Bangkok-Hanoi flights more than a half year after it launched the service in early November 2007, mostly due to rising fuel cost that goes in pace with the world's volatile oil prices.

Vo Huy Cuong of the Civil Aviation Administration of Vietnam has confirmed with the Daily about Nok Air's cancellation of flights to Hanoi. But, the director of CAA V's Air Transport Department says Nok Air is not the only case as another budget carrier, Cebu Pacific, has already called off the Manila-Hanoi service in less than four months the Philippine airline commenced flights to Hanoi.

Cuong elaborates unlike the way that Nok Air cancelled its air service to Hanoi, Cebu Pacific cut its flight frequency to two a week from three one-month before the route suspension.

Flight frequency cut

Cuong reveals that Cebu Pacific reduced its flight frequency for the Manila-HCM City route to the current three weekly flights on Tuesdays, Thursdays and Saturdays from the four previously in July.

Life is not rosy for not only Nok Air and Cebu Pacific but also other small airlines that have cut one or two flights to Vietnam or are planning a reduction in flight frequency to Vietnam, a market expected to hold great potential for growth.

Cuong points out small airlines and newcomers from Taiwan and other markets sometimes cut their number of flights to Vietnam. He discloses Eva Air, UniAir and China Airlines have also taken this move.

These carriers say the main reason behind their reduction in flight frequency to Vietnam is that they want to focus aircraft on new routes to China, a huge market where air traffic grows strongly. However, Cuong and other aviation officials and experts agree that the explanation is just one of the reasons and measures they count on to cope with soaring fuel cost in the face of low demand for air travel because of the global economic slowdown.

Cebu Pacific and other airlines such as Viva Macau and Garuda Indonesia have launched promotional fares recently to boost bookings to partly offset fuel costs in the low season for outbound travel while the high season for inbound travel will not come until late October in Vietnam.

Again, the full-service Malaysia Airlines is promoting zero fares for the trip from HCM City to Malaysia's Kuala Lumpur and from US$19 for the trip from Hanoi.

What the carriers has done in the face of rising cost gives experts a reason to say that more foreign airlines active in Vietnam are planning to cut their flight frequency to this market.

Real reasons

Apart from soaring fuel costs, small and new foreign airlines are grappling with fiercer competition, with the advantage held by the major players, Cuong says. He demonstrates that Nok Air had to face big airlines on the Hanoi-Bangkok route, including Vietnam Airlines, Thai Airways International, Air France and Air Asia, the last-named being the leading low-cost carrier in Asia.

Thai Airways International now operates two daily flights between Bangkok and Hanoi and Thai Air Asia flies three times a day between these two destinations. Both give passengers more choice of travelling between the two destinations.

Market experience is also important for airlines to ride out the tough times. Thai Air Asia and Nok Air are all Thai budget carriers, but the Bangkok-based member of the group Air Asia always gains a competitive edge over Nok Air as it launched services to Hanoiin2005 and sells more competitive fares including zero fares, while Nok Air commenced services just in early November last year and was able to offer the lowest fares from 9 US cents.

Ta Viet Tien, chief representative of Tiger Airways in Vietnam, says unfavourable flight schedules put some airlines at a disadvantage when competing with other players on the same routes at a time of soaring costs.

Cuong of CAAV backs Tien's view that it is not easy for airlines to operate efficiently if their planes depart, especially from Vietnam at 1am or 2 am. This is a better explanation for Cebu Pacific, whose aircraft departed from Hanoi at 1:10 am. and now takes off at Tan Son Nhat International Airport in HCM City at one o'clock in the morning.

However, Nok Air still had to stop its Hanoi-Bangkok service though it received approval to land on Noi Bai International Airport in Hanoi at 12:05 pm. and depart at 12:45pm as well as 7:50 pm. and 8:30 pm respectively.

The arrival and departure schedules of Nok Air were favourable for guests, particularly travellers to check in and out at the hotels in Hanoi. This was the reason why the carrier's chief executive officer Patee Sarasin said in a statement sent to the Daily on the launch day that the carrier was excited about launching the service to Vietnam for the first time.

But reality was quite different from what Nok Air had hoped when the carrier had to face tough competition in the context of slower-than-expected growth in the number of Vietnamese visitors to Thailand and international arrivals in Vietnam.

The Vietnam National Administration of Tourism reported nearly 340,000 foreign travellers came to Vietnam in August, up a mere 2.7% over July but a year-on-year drop of 4.8%. The number of international visitors in the first eight months of this year grew only 6.9% year-on-year to exceed three million.

The Saigon Times Daily - September 9, 2008