| 3.6.
Flight Management System:
- Air
Traffic Control:Consists of two long-distance controlling
centers in Hanoi
and Ho Chi Minh City
, and a close controlling unit in
Da Nang . These centers are equipped
with machines and facilities that meet the standards of the International
Civil Aviation Organization (ICAO). However, the control towers operate
with poor and deteriorating equipment.
- Technical
supports for navigation:
- Aviation Information: up-to-date equipment
enables response to situations and emergencies when needed.
- Air Navigation: improvement necessary to
assure safety and coverage of all flight routes.
- Air Supervision: non-uniformed employees
operate using old methods, and should be updated to insure safety
of the passengers.
- Aviation meteorology center: Most equipment is non-uniform and underdeveloped.
Replacement is taking place.
- Search and Rescue Operation: A Committee of Search and Rescue has been established. Training
for search and rescue activities is conducted annually. The CAAV works
closely with neighboring countries on safety procedures and numerous
co-operation activities.
3.7.
Financing:
Financing is the most serious challenge
for Vietnam
’s civil aviation sector. Since 1975, the sector has been
subsidized 100% by the government. Its financial and accounting mechanisms
have been centralized and are totally controlled by the government.
In addition, since the establishment of the Vietnam Airlines Corporations,
the government has had to cover its losses, even though it is a monopoly.
The Vietnamese civil aviation sector has been unable to profit or experience
financial growth.
From 1993–1997, the Vietnam
civil aviation sector invested VND 947.6 billion,
equivalent to 24.4% of the total state budget.
Of the 947.6 billion, VND 585 billion is invested in the Flying Information
Region (FIR) construction project and 596.6 billion in other aviation
infrastructure projects.
As
part of a more comprehensive plan, Vietnam Airlines will receive financial
support from the US Export and Import Bank (USEXIM), Overseas Private
Investment Cooperation (OPIC), Airport Group International (US), the
DAR group (UK), DIWIDAG (Thai-German), and Maeda (Japan). This support
of USD$3 billion will be used to upgrade the infrastructures of the
existing airports and to build new airports over the next ten years.
4.
Foreign Airlines’ participation
in the international air transportation market of Vietnam Airlines:
Participating frequently in the international air transportation market
of Vietnam Airlines are 21 foreign airlines of 19 nations. These include
7 airlines of North-East Asia (primarily Cathay Pacific, Japan Airlines,
and Thai Airways), 7 airlines of the South-East Asia (primarily Singapore
Airlines and Malaysia Airlines), 5 airlines of Western Europe (primarily
Air France, Lufthansa, Swiss Air), and one airline of Australia (Quantas).
In general, these airlines operate in
Vietnam under the form of a
traditional agreement. Up to now,
Vietnam has signed 41 agreements
with other countries for both indirect and direct flights. Most of these
airlines are more competitive than Vietnam Airlines.
Five US
airlines recently accessed the
Vietnam market via code-sharing
agreements, namely United Airlines, American Airlines, Delta Airlines,
Northwest Airlines, and Continental Airlines. The civil aviation relationship
between the US
and Vietnam
has thus begun. In July 2001, American Airlines
signed an agreement with Vietnam Airlines to operate code-sharing flights,
which will start in 2002. According to the decision of the Department
of Transportation, Delta Airlines will code-share with Air
France to supply
services to Ho Chi Minh City
and Hanoi
. Northwest Airlines will code-share with Malaysia Airlines
and KLM Royal Dutch Airlines ( Holland
) to Ho Chi Minh City
and Hanoi
, United Airlines code-shares with All Nipon Airlines (
Japan ) and Thai
Airways International and Lufthansa Airlines (
Germany ) to
Ho Chi Minh City . In the
short term, these three airlines can operate 21 round-trip flights to
Vietnam
.
B.
US
CIVIL AVIATION SECTOR
The
US
has the most long-standing civil aviation sector in the world. Like
such industrialized European countries as
England ,
France , and
Germany , the
US civil aviation
sector bore international characteristics from its early years, making
it superior to travel by surface or sea.
In
1944, along with improvements to the science and technology of aviation,
the demand for air transportation increased dramatically. Recognizing
this trend, the US
, a key nation in international civil aviation,
led the world in establishing the International Civil Aviation Organization
(ICAO), and after that the International Air Transport Association (IATA).
Since then, US
civil aviation has been the strongest aviation
force in the world. The US
has a decisive influence on international aviation
organizations and on regional and bilateral aviation agreements.
The following milestones will provide more complete insight into the
development of the US
civil aviation sector:
1. After World War II:
1.1.
Bilateral Aviation agreement with European Allies:
During this period, the US
signed bilateral aviation agreements with European
Allies. These agreements strongly affected the political and economic
life in European countries. The goods and financial aid from
Northern America helped these countries recover after
the war.
US aviation was
strengthened by the development of aviation technologies in First, Second
and Third generation planes,
and by flight route networks all over the world. Flights covered North
and South America ,
Europe , Asia
, and Africa . The
US market-share
accounted for 80 percent of international aviation.
1.2.
Bilateral Aviation agreement with defeated countries:
After World War II, bilateral civil aviation agreements were signed
between the US
and defeated countries
Japan ,
Germany , and
Italy . The Japanese
believed their airlines were poorly situated in their agreement. The
agreement served to link American routes to Asia
, and the US
had a definite advantage in exploring these routes.
During this period bilateral aviation relationships were totally beneficial
for the US
.
2.
FROM THE 1960s TO THE 1970s:
From the mid-1960s to the 1970s, European and especially Asian aviation
developed aggressively. International air routes covered all of
Europe . Remarkably, the Asian market-share in international
aviation increased 25–30 percent, the European market share increased
10 percent, and the US
market-share fell 55 to 60 percent.
Despite the expansion of bilateral aviation relationships, countries
were still limited to Fifth Freedom Rights. There was a new demand for
control of the international air transport network. Recognizing this,
the Carter Administration developed a new policy for international air
transportation. This policy included aviation modernization and opening
skies for free competition, leading to a new revolution in the structure
of US aviation. While over 200 airlines suffered bankruptcy in the
US due to this
policy, many vigorous airline corporations were established with the
strength to expand the world market. Among these airlines were American
Airlines, United Airlines, Northwest Airlines, and Delta Airlines.
3. From the 1970s to the present:
Global
alliances have become a cooperate trend, a new requirement for airlines
in the world. In response to the global demand for traveling, single
airlines without a large network decided to join global alliances, and
take advantage of opportunities for investment in more aviation markets.
“Open Skies” has been the main
US international air transport
policy during this period.
OVERVIEW OF THE US-VIETNAM AIR TRANSPORT MARKET
Despite the long suspension of diplomatic relations between the
US and
Vietnam due to
the US
trade embargo, the air transport market between the two countries has
existed since the 1990s. Thanks to the “open-door” policy of
Vietnam , which
has stimulated investment, trade, social, and cultural exchange, the
passenger market between the
US and
Vietnam has greatly
expanded.
The air transport market between the
US and
Vietnam is large
and has great potential. To date, although there has been no direct
flight route between the two countries, the number of passengers is
increasing. This can be seen via data from 1993 to 2000.
Approximately 30,000 passengers traveled from the
US to
Vietnam in 1991.
The volume multiplied by 5 times in 1997, accounting for 140,000 passengers
from both the US
and Vietnam
.
In 2000, the total number exceeded 175,000.
Under
the current market structure, more than 1 million Vietnamese are living
in the US
, accounting for 60% of the passenger volume between
the two countries. These expatriates visit relatives in
Vietnam and travel
as investors and tourists. In addition, American tourists and US veterans
account for 38% of the market share.
The remaining travelers are
US investors, politicians,
diplomats of both countries, and students on study tours.
Despite difficulties obtaining visas to the
US , it is believed
that the US
is still the biggest passenger market to and from
Vietnam
. With a GDP of 31,000 US dollars, each year around 60 million Americans
travel abroad, while approximately 46 million foreigners visit the
US . Over 10 million
people travel each year between the
US and Asia
. The number of passengers traveling between
Vietnam and the
US
accounts for only 2% of the Asian total. The number of passengers from
Vietnam
to the US
is only 6% of the number of passengers from the
US
to Vietnam
.
Taking
into consideration the market structure and traffic growth since the
1995 normalization of relations between the
US and
Vietnam , the commercial
and investment cooperation between two countries has not yet fully developed.
This is partly because Vietnam
has not yet been granted the Most-Favored-Nation
status. It is believed that when the US-Vietnam Bilateral Trade Agreement
comes into force and when the MFN status is granted to
Vietnam , passenger
traffic between the two countries will increase at a greater speed.
Because there is no government agreement on air services between the
US
and Vietnam
, none of their airlines has carried out direct
air services. Until there is an agreement, code sharing is the temporary
method. At the moment, passengers
traveling between the US
and Vietnam
are carried via intermediate points in
Northeast Asia
and Southeast Asia (Trans-Pacific
service to the West Coast) or in Western Europe
(Trans-Atlantic service to the East Coast). Passengers traveling between
the US
and Vietnam
must use connection points, of which
Taipei ,
Seoul , and
Hong Kong account for 80%. Fifty percent of the US-Vietnam
air passenger market is absorbed by China Airlines and Eva Airlines.
Vietnam Airlines, thanks to the code-sharing contract with China Airlines,
serves only 9% of the market.
The remainder is divided equally among Korean Air, Cathay Pacific, Singapore
Airlines, and Asian Airlines.
Not having direct flights has allowed airlines of the connecting countries
to aggressively exploit the air services market between the
US and
Vietnam . This
may cause disadvantages for direct services by airlines of the two countries
in the near future. Moreover, present aircraft performance may hinder
the non-stop options for airlines of
Vietnam and the
US , but make no
difference for options provided by airlines currently exploiting the
Sixth Freedom Right.
This will pose a definite challenge to US and Vietnamese airlines when
they commence direct service in the coming years.
The US-Vietnam Bilateral Conference on Civil Aviation was held in
Hanoi from March 18–20, 1998 . The conference
aimed to foster cooperation between the two countries in the air transport
sector. It also aimed to strengthen relations on investment, commerce,
and tourism, in the process of normalizing US-Vietnam economic relations.
After the conference, both parties carried out consultations on the
US-Vietnam Bilateral Agreement on Civil Aviation. The agreement is considered
a basic foundation for opening a direct flight between the two countries.
However, there have been a number of lingering issues. On the
one hand, Vietnam
wants a temporary agreement with a deadline of
3 to 5 years, after which a complete agreement could be approved. Prior
to this consummation, Vietnam must solve a wide range of problems on
air safety, air services, training, customs, and aircraft leasing and
purchasing, to name a few. On the other hand, the
US wants an “Open
Skies” agreement immediately to establish the long-term aviation relations
between the two countries.
In short, the air market between the
US and
Vietnam is very
promising. The US
has ignored this market for a long time, but “landing”
the five biggest airlines will encourage rapid growth. It is expected
that in 5 to 7 years, the market will catch up and displace the markets
between Vietnam
and Western Europe
. Nevertheless, because
the governments of the US and Vietnam have not reached a civil aviation
agreement, and because airlines of the two countries have not aggressively
developed strategies and mutual cooperation, third country competitors
are the ones currently benefiting in the air services market.
Code sharing is the method of cooperation, in which one airline
accepts the other’s code on its certain flight as agreed and vice
versa.
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