Summary
- Pacific Airlines will halt operations to restructure and assess its fleet and routes.
- Passengers impacted by the pause will be accommodated on Vietnam Airlines flights.
- Competition and price caps in Vietnam’s aviation market contribute to operational challenges.
Pacific Airlines, a budget airline under the umbrella of Vietnam Airlines, will temporarily halt its operations for an urgent restructuring. The airline, which has been experiencing financial losses, plans to utilize this pause to assess its fleet and route network, aiming to enhance operational efficiency, as stated by the airline.
For several years, the airline has encountered operational challenges. In 2022, it suffered a loss of close to VNĐ2.1 trillion (US$84.5 million), primarily attributed to the effects of the COVID-19 pandemic. Since then, it has grappled with efforts to regain profitability.
Photo: Minh K Tran / Shutterstock
The halt of operations and the upcoming restructuring
Commencing on March 18th, 2024, the airline has notified passengers that numerous flights will not be accessible; however, it reassures them that “new flight schedules will be arranged to maintain stable operations.” As part of the strategy, the airline intends to return all leased Airbus A320s to their lessors.
It is anticipated that in the interim, passengers will be accommodated on flights operated by Pacific Airlines’ parent company, Vietnam Airlines, to ensure some consistency for affected travelers. Additionally, Pacific Airlines has affirmed that any adjustments made will prioritize the protection of customer rights and benefits.
Photo: Vytautas Kielaitis | Shutterstock
As per the airline’s statement, Pacific Airlines will lease aircraft from Vietnam Airlines as part of the restructuring plan to improve operational efficiency and maximize resource utilization within the Vietnam Airlines Group. The two entities are presently in the process of finalizing these arrangements, and the leased aircraft is anticipated to be delivered in the upcoming weeks.
Apart from aircraft provision, the revamped carrier will benefit from support from Vietnam Airlines, including the sharing of infrastructure and airport ground services like check-in counters and airport shuttles. Đinh Việt Thắng, Director of Vietnam’s Civil Aviation Administration, stated that initially, Pacific Airlines will dry lease three aircraft from its parent company while managing its own crews, maintenance, and insurance once it resumes operations. He stated:
“This activity is necessary for Pacific Airlines to recover effectively, adapt to the new environment, and develop in the future.”
Stiff competition faced by Pacific Airlines
Despite operating in one of Southeast Asia’s rapidly expanding aviation markets, Pacific Airlines has encountered stiff competition from market leader Vietjet Air and has grappled with a price cap enforced by the Vietnamese Transport Ministry.
The price cap was revised upward by 5% in March 2024. Airlines are now permitted to sell fares of up to VND1.6 million (US$64.6) for domestic routes under 500 km (310 mi.) per one-way ticket and VND1.7 million (US$68.7) for other routes. This has intensified competition within the local airline industry, resulting in lower yields.
Photo: David Velupillai | Airbus
The carrier’s collapse underscores the cutthroat nature of Vietnam’s market, characterized by fierce competition on routes linking the major cities of Da Nang, Hanoi, and Ho Chi Minh City, alongside a clientele highly sensitive to pricing. Meanwhile, another Vietnamese carrier, Bamboo Airways, has significantly scaled back its operations, including the cessation of its international routes in late 2023.
Reports indicate that Bamboo Airways now operates merely six A320-family aircraft, a stark contrast from the 30 aircraft it operated a year prior, comprising A320s, A320neos, Boeing 787-9s, and Embraer 190s.
Related
Vietnam’s Bamboo Airways Set For Fleet Restructuring In October
The airline currently operates a total of 30 aircraft.
