Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour. https://www.ft.com/content/28e5f698-9631-11e9-8cfb-30c211dcd229

Start-up carrier Bamboo Airways intends to launch Vietnam’s first direct flights to the US by early next year on a leased Airbus A380, signalling the ambition of the newest entrant to one of Asia’s fastest-growing aviation markets.

Trinh Van Quyet, chairman and chief executive of FLC, the Hanoi-based real estate and resorts group that owns the airline, said Bamboo had applied to US aviation authorities for permission to fly to the US and was now pinning down details of the non-stop flight.

“We will start in the first quarter of 2020 if we get permission by the end of this year,” Mr Quyet told the Financial Times.

The US Federal Aviation Administration in February opened the door to direct flights, awarding Vietnam a “Category 1” rating confirming the country meets international safety standards. That cleared Vietnamese airlines to fly to the US and code-share with American carriers. However, individual airlines must also secure FAA and Department of Transportation approval to fly to the country.

National carrier Vietnam Airlines is considering launching flights to the US west coast. VietJet Air, its biggest competitor, is believed to be weighing a similar move, but declined to comment on its plans.

The competition to launch Vietnam’s first direct US flight comes as passenger numbers soar, driven primarily by rising international tourist arrivals and as more people in one of Asia’s fastest-growing economies travel overseas. According to CAPA-Centre for Aviation, Vietnam had roughly 38m international passengers and 16m visitors in 2018, up from 18m passengers and 8m visitors in 2015.

Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour. https://www.ft.com/content/28e5f698-9631-11e9-8cfb-30c211dcd229

Mr Quyet said Bamboo Airways was considering flying to either Los Angeles or San Francisco, but had yet to decide whether the flight would depart from Hanoi, the capital, or Ho Chi Minh City, Vietnam’s largest city and business hub.

Bamboo — which only began flying in January — announced its plans for a non-stop flight in a recent document for its shareholders’ meeting, but this was the first time its top executive discussed planned destinations and the aircraft it intended to use.

There are no direct flights from Vietnam to the US, which for years deemed the south-east Asian country’s aviation safety standards inadequate. Most passengers travel via Singapore, Taipei, Tokyo or another Asian city.

However, analysts expressed scepticism about Bamboo’s timetable for launching a direct US flight, and its chances of competing successfully on a route controlled by bigger, longer-established airlines.

“Bamboo is a very new airline, and they don’t have much history,” said Brendan Sobie, a Singapore-based analyst with CAPA. “So securing approval from the FAA individually as an airline could take a lot of time.”

Non-stop long-haul flights are more expensive to operate than flights with a layover because carrying the necessary fuel adds to costs.

Analysts expressed surprise that Bamboo was considering an A380 for the route. Given its weight, the largest commercial airliner in use is rarely flown on ultra long-haul routes of 12 hours or longer.

Mr Quyet said Bamboo’s flight to the US would take between 14 and 16 hours depending on the final route chosen.

“What we’ve seen when airlines launch ultra long-haul flights is that they need premium traffic to make the economics work,” said Andrew Lobbenberg, head of European transport equity research at HSBC. “That high-fare, high-yield premium business would be quite hard for a new challenger brand to capture.”

Mr Quyet said potential passengers would include “businessmen and people who want to visit their relatives in the US”, which has the world’s largest Vietnamese diaspora population.

Bamboo launched its services using Airbus A321neo aircraft, and has further orders for Boeing 787 Dreamliners. It has focused on flights to destinations where it has resorts, and on the Hanoi to Ho Chi Minh City route, one of the world’s busiest, touting itself as a “five-star airline” offering business class on all flights.

Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at https://www.ft.com/tour. https://www.ft.com/content/28e5f698-9631-11e9-8cfb-30c211dcd229

FLC’s launch of Bamboo Airways is emblematic of a diversification by Vietnam’s cash-rich real estate companies, which made their fortunes helped by land deals as state-owned enterprises sold assets.

Vingroup, Vietnam’s biggest property group, is pushing into areas including mobile phones, technology and cars.

Mr Quyet told the FT that FLC also plans to move into wind and solar power — areas the government is promoting as Vietnam moves away from a reliance on coal — and is opening a university to train its flight attendants, resort employees and other staff.

FLC’s chairman, the son of a policeman, is typical of Vietnam’s new generation of entrepreneurs hailing from modest backgrounds. He began in business as a teenager, selling tea, fertiliser and later computers and phones.

When asked if Bamboo might consider a public listing, Mr Quyet said it was possible “in the future, but not yet”.

By John Reed & Pham Hai Chung - The Financial Times - June 27, 2019