The CEO of Bamboo Airways dissects the story of ‘crazy, profit and loss’ and the challenge of flying directly to the US
“People are afraid that flying straight is a loss, so they still hesitate, Bamboo Airways is different”,
Mr. Dang Tat Thang (CEO of Bamboo Airways) said so in a conversation with us, to answer some doubts related to the direct route between Vietnam and the US.
“The dream of flying directly to the US” is something Vietnamese people have cherished for more than 20 years. But when it was announced by Bamboo Airways (Vietnam’s youngest airline), many people doubted it. It is reported that no domestic airline has been granted a license to commercially operate direct flights between Vietnam and the US. What would you say about such information?
CEO Dang Tat Thang: All Vietnamese airlines cherish the plan of direct flights between Vietnam and the US. Some companies have prepared for decades, but so far they have not been able to do it. Possibly for many reasons. But an important part, people are afraid that flying straight is a hole, so they are still hesitant, not planning to deploy.
Bamboo Airways is different. From the very first day of our establishment, we set a goal to be the first airline in Vietnam to fly directly to the US.
The recent test flight is a condition for US authorities to assess whether Bamboo Airways is capable of operating regular commercial non-stop flights.
The Civil Aviation Authority of Vietnam has designated us as the regular commercial non-stop airline between Vietnam and the US. The Ministry of Foreign Affairs of our country has also sent a note to the US Embassy in Vietnam about this.
Currently, we are waiting for an agreement between the Governments of Vietnam and the US on the issuance of vaccine passports, which regulate the entry of citizens of the two countries.
As planned, by the end of this year, we will launch the first regular commercial flight to the US, and try to fly from Hanoi, Saigon to San Francisco with a frequency of 5 flights/week.
Many economic experts say that direct flights between Vietnam and the US can make airlines lose up to 100 million USD per year. The more you fly, the worse your business will lose, and even go bankrupt. What do you think about those comments?
CEO Dang Tat Thang: When we mentioned flying directly to the US, a lot of people said Bamboo Airways was “crazy”. They think: if we keep trying to open this route, we will probably go bankrupt because it is extremely expensive.
Not only do Vietnamese people have doubts, but major partners in the world also do not believe. Even TSA – the US Department of Homeland Security (the last unit to approve allowing flights into their country) raises the same question.
They asked me: Vietnamese people have a lot of options for connecting flights to the US, so why are you so eager to fly directly? Has Bamboo Airways considered the difficulties and potential losses on this route?
In fact, the route to the US is having very fierce competition. We can go to Korea, Taiwan, Japan… for connecting flights. Some Japanese airlines even have special programs for customers from Vietnam. Their fares are ridiculously cheap.
But I told the US authorities: when we opened this route, we carried the mentality of a pioneer.
Vietnamese who want to go to the US are having to fly around a third country. Their journey was long and arduous. Sitting on a foreign plane also makes them feel alien. If Bamboo Airways can fly directly, I believe, traveling between the two countries will be much more convenient. After only 13 hours of sitting on a Vietnamese plane, they arrived in the US.
As for profit or loss, I think, if it was afraid of loss, FLC would not have opened Bamboo Airways. And if Bamboo is afraid of failure, we will not invest in opening a direct flight to the US for nothing.
In the past, when we wanted to exploit wide-body aircraft, major aircraft leasing/buying partners in the world also shook their heads nervously. In the world, there is no airline that wants to exploit wide-body aircraft after only 1 year of taking off. But in fact, Bamboo Airways has done that.
About flying directly to the US, when we announced it nearly 2 years ago, many people laughed. Now we can do it. Although there are still doubts, I think it is also the motivation for us to try to prove more.
Two US airlines with strong financial potential also had to withdraw from the direct route between Vietnam and the US. Are you sure: Bamboo Airways will not lose money?
CEO Dang Tat Thang: About 10 years ago, when United Airlines and Delta Air Lines (two American airlines) opened their way to Vietnam, they still had the mentality of market explorers. The time was very inappropriate, so it was inevitable that they would retreat quickly.
Currently, Vietnam is the leading economic growth in Asia. Vietnam – US relations also continue to have impressive development steps. Bilateral travel volume currently reaches approximately 800,000 passengers/year, a sharp increase compared to the 2007 period when US airlines flew connecting flights. We preliminary calculate, with the increasing number of Vietnamese in the US, as well as the needs of domestic people, direct flights will have many opportunities.
Besides, Bamboo Airways has also outlined many separate plans, for example:
Firstly, when it comes to aviation, we will have to calculate the overall flight network, not just look at the loss – profit on a route. With a wide network (60 domestic routes and 30 international routes in the future), we will ensure efficiency on all routes by offsetting costs.
Second, we will carry goods on a direct route between Vietnam and the US. Currently, Bamboo is Samsung’s largest cargo-partner with a frequency of 1 trip/day to connect Hanoi – Seoul.
If this problem is successfully applied to the Vietnam-US route, the preliminary calculation will be enough to cover the cost.
Third, the key point when flying the US is to fly straight. If flying around, Vietnamese airlines will not be able to compete with foreign airlines. The current problem is that there is no aircraft line that can both fly directly and still be full in the winter.
We have calculated the reasonable solution is to fly to San Francisco by Boeing 787. After the test flight, we ran the model, calculated the exact amount of fuel pumped on the flight, then calculated the cost. the commercial cost of the flight and it will certainly be an efficient route.
But if we had to consider using other routes or transporting goods to offset costs, would the direct route between Vietnam and the US be a promotional way of Bamboo Airways in the first place?
CEO Dang Tat Thang: If you stand in my position and experience the feeling of looking at Vietnam’s aircraft from when it was a small dot in the sky until it appeared clearly and slowly landed, rolling into position in the sky. US airport, with two Vietnamese – American flags flying, you will understand what pride feels like. At that moment, I texted Trinh Van Quyet (Bamboo Airways Chairman), saying that I felt like I had just welcomed a new baby.
For Americans, I believe, when they see a plane with the Vietnamese flag… it’s purely a promotion not only for us but also for the whole country of Vietnam. Because a country has a direct flight to the US, the story of going to the world will certainly be very different.
What did Bamboo Airways with just over 2 years of taking off in Vietnam do to convince the US authorities to license it, while this is already one of the most demanding markets in the world?
CEO Dang Tat Thang: The US when evaluating an airline will be based on many criteria. For example, Bamboo already has IOSA, which is a major safety certificate, but US officials still carefully check the rate of safe flight operation, the rate of on-time flight, and the organization and structure of the airline. aviation … to see how the flight safety monitoring is implemented, does it meet American or European standards?
They also directly reviewed the conditions of Vietnam’s airport, the capacity of the Civil Aviation Authority of Vietnam, the airline, the fleet… TSA also had an overall interview with us from the leadership level to the staff. pilots, flight attendants…
But I think everything the US side does is very methodical and follows the process. As long as they fully meet the criteria, they will definitely pass.
The challenge lies in the fact that, after all, Bamboo Airways is still a representative of its own airline and a young airline that has to compete with other airlines. We have to always try to prove to everyone that we can do it.
Is there anything memorable about the proof of that ability, sir?
CEO Dang Tat Thang: After Bamboo Airways was granted a flight certificate in 2019, the Director of the Civil Aviation Administration said: Thanks to Bamboo Airways, the evaluation standards of the Department have also been upgraded.
At that time, the Civil Aviation Administration was in the process of receiving the CAT-1 certificate. With this certificate, Vietnamese airlines can register for direct flights to the US. In Southeast Asia, Thailand used to meet this standard, but now it has dropped to CAT-2 and they are not eligible for direct US airlines.
When Bamboo Airways started making AOC certificates with the Civil Aviation Authority of Vietnam, the Department was making CAT-1 certificates. As a result, our certification has to follow the new American standard. Previously, there was no airline in the country that did a standard AOC certificate like Bamboo Airways.
The statement of the Director of the Civil Aviation Authority of Vietnam makes me believe that one of our great successes is proving to the leadership our ability and competitiveness not only in the country but also reaching out to the region. area.
In the past two years, the pandemic has paralyzed the aviation industry, and the planes that should have been in the sky have been mostly lying dormant on the ground. However, Bamboo Airways still reported a “huge” profit of 400 billion VND (in 2020). Can you explain more about this?
CEO Dang Tat Thang: 2020 is a very difficult year. But what people see about the plane lying on the tarmac at the airport will not be everything. In the midst of adversity, we still find many new opportunities.
Firstly, Bamboo stopped international flights very early to focus on domestic. We opened many more niche routes such as direct flights to Con Dao, Ca Mau, and here to Dien Bien. Experiencing each wave of Covid-19, the domestic market has always proven a strong bounce after the epidemic and is the “salvation” of aviation.
We operate the Embraer jet engine, which can fly to small airports, with a moderate number of seats, guaranteed full seats but very competitive fares.
Second, Bamboo’s growth still includes financial growth. But I insist: flying revenue is still the most important.
Third, Bamboo organized many rescue flights for provinces, coordinated with hospitals to carry humanitarian flights, and coordinated with the Ministry of Foreign Affairs to bring Vietnamese citizens home.
Wednesday, we organize cargo flights with a frequency of 4 flights to Japan/week and 7 flights/week to Korea…
The fifth is saving, managing costs tightly. As for the revenue, try to take advantage of legitimate sources of revenue because any source of income is very precious.
Of course, Bamboo has the advantage of being the “baby” of FLC Group and is favored both financially and in terms of personnel. This time, FLC is promoting restructuring. But which projects are necessary for Bamboo, FLC will not regret it.
So what will the picture of Bamboo Airways in 2021 be like?
CEO Dang Tat Thang: 2021 will be a much more difficult year than 2020. In the past two months, the entire network of airlines in Vietnam has been “covered”.
But also during a business trip to the US, I found that their domestic flight market has recovered about 90%. That shows that the US economy is recovering very well. Traffic is the lifeblood of the economy, so the delay in aviation restoration can cause great damage. Personally, Bamboo Airways and I are very hopeful, Vietnam will also achieve the same recovery as the US in the last months of the year.
In the 2 years of dealing with the pandemic, how did you work with the mentality?
CEO Dang Tat Thang: When the work increases or encounters difficulties, pressure is unavoidable. Everyone experiences stress at some point, but it’s important to find ways to release it and stay positive.
When facing difficulties, many businesses have chosen to cry and cry. But we will always choose to save ourselves with specific solutions and measures. Because even if you cry and cry? Not only will it not solve anything, but it can make people look down on you even more.
If you consider difficulties like knots and try to find a way to remove them, gradually, all difficulties will pass!