Bamboo Airways CEO talks about returning ships and stopping flights to Con Dao

Bamboo Airways General Director Luong Hoai Nam.

High operating costs, low mining efficiency

Why did Bamboo Airways return the Embraer 190 and stop operating flights to Con Dao, sir?

Con Dao Airport is an airport with a short runway, only 1.8km. After Dien Bien Airport is upgraded, the country only has 3 airports with short runways: Con Dao, Ca Mau, Rach Gia.

Jet aircraft that can take off and land on short runways are very rare, almost non-existent in Vietnam and the Asia-Pacific region. This gives rise to many complex problems.

First, neither Vietnam nor the Asia-Pacific region has a maintenance facility for this type of aircraft. Previously, Air Mekong had to bring its jets for maintenance to Europe or North America.

Currently, Bamboo Airways has to send maintenance to Poland. Materials and spare parts are not readily available, the time to purchase and bring them back to Vietnam is also long, and the cost is expensive. Regarding pilots, Bamboo Airways also has to send pilots to Japan for training.

The Embraer 190 jetliner is a huge fuel hog.

In terms of fuel, jet aircraft that can take off and land on short runways consume a lot of fuel, comparable to the Airbus A320, but can only carry half the number of passengers.

Overall, the operating efficiency of this aircraft is very low. On average, the annual operating cost of an Embraer 190 aircraft is about 5 million USD, which is not feasible for a small airline in the process of restructuring like Bamboo Airways.

But the reality shows that the demand for flights to Con Dao, especially direct flights from Hanoi to Con Dao, is very high. Why doesn't Bamboo Airways increase ticket prices to reduce losses?

We are still maintaining the ceiling on airfares. People can accept higher fares, but currently the management agency does not allow it. Bamboo Airways is therefore forced to choose to stop operating this type of aircraft.

Why did Bamboo Airways choose this time to return the ship, sir?

There are several reasons. First, we need time to negotiate with the aircraft owner, to ensure that returning the aircraft is not too costly.

If we compare it to a normal lease contract, returning the aircraft early would result in a huge penalty. Very recently, we reached an agreement with our partner, so that we basically do not have to pay any penalty.

Second, winter and Tet are the peak travel seasons for the domestic market. Especially during Tet, in addition to the very high general demand, the demand for flights to Con Dao is also very high. Therefore, when negotiating with partners, we also choose the time after Lunar New Year, when the winter flight schedule ends, to return the ship.

Aim to break even by 2025

Bamboo Airways will only operate single-line narrow-body aircraft A320, A321 of Airbus.

After ceasing operations of the Embraer 190 and previously the Boeing 787-9 Dreamliner, Bamboo Airways is now only operating the narrow-body Airbus A320 and A321 aircraft. What are the benefits of this for Bamboo Airways?

In Vietnam, in the region, and even around the world, many airlines have been successful with the A320/A321. This is a very economical aircraft.

The only problem now is what we will do to optimize revenue, reduce operating costs, and operate the A320/A321 aircraft to achieve success like other airlines.

With the Boeing 787 Dreamliner, this is also a very famous aircraft line, one of the best in the world for long-haul flights. But currently Bamboo Airways is not ready to operate successfully on a long-haul, intercontinental flight network. It is a very difficult business, especially in the context of the Vietnamese market with a very low proportion of Business Class passengers. This is no different from using a Mercedes to run a taxi.

Obviously, the Hanoi - Con Dao route is also a quite successful route of Bamboo Airways, leaving an impression of Bamboo Airways on passengers. Will the airline ever consider operating this route again?

We will definitely return to operate the Hanoi - Con Dao route. The Ministry of Transport has a plan to expand and lengthen the runway at Con Dao airport. Ca Mau airport will also have its runway expanded and lengthened to accommodate A320/A321 aircraft. We will return to these airports with Airbus A320/A321 aircraft.

After unifying the fleet, how long does it take for Bamboo Airways to stop losing money and move towards profit?

In the Bamboo Airways restructuring plan reported to the Government at the end of last year, we clearly stated that we would try to minimize losses in 2024, with the specific goal of reducing operating losses to around VND1,000 billion compared to VND4,000 - 5,000 billion per year in the previous 5 years. We also set a business target of breaking even in 2025 and making profits in the following years.

Currently, we are implementing this restructuring plan and roadmap correctly.

Thank you very much.

Source: https://www.baogiaothong.vn/ceo-bamboo-airways-noi-ve-viec-tra-tau-dung-bay-den-con-dao-192240224152506463.htm