Bamboo Airways has sparked off a debate when becoming the Vietnam’s first airline to sign Memorandum of Understanding with Boeing and Airbus for aircrafts worth USD 10 billion before launch. However, Trinh Van Quyet, Chairman of FLC Group (parent company) stated: “Once we do this, we want to do it big”.
Doing aviation business, I do not want to form partnership!
“In 2008, I already thought of joining the aviation sector even though FLC Group was still on a modest scale. Many others definitely discouraged me from doing that. “
Trinh Van Quyet, Chairman of FLC Group
When did the aviation business idea come to you?
In 2008, I already thought of joining the aviation sector even though FLC Group was still on a modest scale. Many others definitely discouraged me from doing that due to the inability to compete and insufficient resources. I found the market highly promising while there was only one single monopolistic airline at that time.
As a lawyer, I do not prefer monopoly, actually I think no one does. It is similar to the fact that having no freedom to choose when going to supermarket with only one single goods is very boring; or having to queue for services as if during the subsidy period is unpleasant, sometimes you even can be yelled at
With more providers, we could have more options and higher quality services. It is similar to the fact that selecting from 2-3 people before getting married would be much happier, without any regrets (laugh).
Then when did that Bamboo Airways idea got back to you?
It was 2013 that FLC Group purchased helicopters and provided flight services for tourists. However, the project has proven rather ineffective enough. In fact, helicopters could only serve the wealthy upper class and also have limited regulative capacity such as no night flights allowed, as compared to the descendant Bamboo Airways that is readily accessible to everyone
also very important because aviation business regulations in the recent 1-2 years are also more relaxing than they were 10 years ago.
Given rather ineffective helicopter business, why did you decide to make a bet on a bigger game with Bamboo Airways?
Why did not you form partnership with a well-established partner but decide to go big on your own?
Why would I? There is no well-established company in Vietnam desiring to form partnership with us to establish a brand-new airline. When it comes to foreign companies, they would just assign their staff and not have the right to contribute capital to take control while experience depends on human resources.
At Bamboo, I have recruited a number of staffs with tens of years of experience in aviation sector, both the Vietnamese and foreigners from management and engineers…
As a matter of fact, FLC Group has many favorable conditions doing aviation business. First, staffs from different departments, infrastructure such as offices and buildings, and relationships could be shared with the parent company. As compared to independent aviation start-up, we have an edge over them.
We further highlight that when doing aviation business we do not want to form partnership with anyone similar to that of real estate.
Every penny we invest, we contrive carefully
“Purchasing weapons is prohibited, purchasing aircrafts is of course encouraged. No one prohibits you from purchasing aircrafts as long as you could afford them. The thing is, whether they want to sell you or not. “
Trinh Van Quyet, Chairman of FLC Group
As compared to real estate sector, how do you find about operating a new airline?
I find it much easier as the State and the airways co-operate the passenger management and service. For real estate sector, licensing is followed by post mortem. For aviation sector, the State’s authorities join us during monitoring the whole procedure from licensing to provision of related services, take-off and landing.
All standards are closely monitored by the competent authorities and in accordance with the world’s safety standards. There is no need to worry when we comply with standards.
You had signed the contracts to purchase USD-billion aircrafts even long before you received the license. Do you find it risky?
At that time, even though license was not issued, we already have obtained approval from relevant Ministries and Departments. Purchasing weapons is obviously prohibited, purchasing aircrafts is of course encouraged. No one prohibits you from purchasing aircrafts as long as you could afford them. The thing is, whether they want to sell you or not, which depends on who you are to be able to purchase Boeing and Airbus aircrafts.
On the other hand, when we decided to purchase, we had to contrive carefully. Every penny we spend, we count carefully, let alone billions of dollars.
Issuance of license for Bamboo Airways has proceeded more quickly as compared to other airlines counting from the time they announced to commence the aviation project to their issuance timing. Do you personally think the process is quick or slow?
Issuance of license for Bamboo Airways has proceeded more quickly as compared to other airlines counting from the time they announced to commence the aviation project to their issuance timing. Do you personally think the process is quick or slow?
According to an official in transportation sector, “the process and procedures for issuing the license for Bamboo Airways are considered as lengthy, careful” and satisfactory.
As compared to other previously licensed airlines, Bamboo took longer time as we were required to assess the environmental impacts in accordance with the new Law on Investment. Only this procedure lasts few months, but cannot be avoided as required by the law.
A South Korean investment fund has approached and requested to purchase shares before the Bamboo Airways’ first flight. What do you think about that?
I have yet to meet anyone nor intend to sell any shares of the airline. Their interest is their business. They will believe in me once I am able to put my words into action.
Bamboo has clear strategies and is currently wholly owned by FLC Group.
Bamboo Airways’ chartered capital currently amounts at only VND 700 billion, do you plan to raise its capital to achieve the target of “doing big”?
As the matter of fact, with only VND 700 billion, it is impossible to purchase aircrafts, staffs and the management system. In fact, VND 700 billion is the minimum legal capital required to provide the domestic and international flights.
Investment funds for Bamboo Airways are secured from a number of financial institutions that are willing to provide FLC Group financial supports. Others may not understand the reason why it took us nearly 2 years to develop the management system, staff training and all.
Why Bamboo Airways “does big”?
“FLC resorts with thousands of rooms will probably bring about the great number of potential passengers. Revenue will definitely grow substantially with the eco resort system of FLC.”
Trinh Van Quyet, Chairman of FLC Group
Other airlines in Vietnam started with only few aircrafts but Bamboo has decided to go big from the start. Why so?
Many years ago, some airlines that purchased and leased some aircraft ended up failure and bankruptcy. I think it was not perhaps the right time to establish airline.
It is different when it comes to present time when the Government encourages private companies to invest in aviation and aims to make tourism a leading economic industry.
However, aviation business requires large-scale investment in air fleet, infrastructure, management system to remain competitive in both domestic and international markets. Thus, investment in only few aircrafts is highly likely to bring out failure.
But no airlines in Vietnam has achieved success with a large-scale air fleet at its onset?
It is difficult to evaluate others based on our own criteria. Each one has their own idea and orientation that lead to different results.
In the real estate sector, many others succeed with golden lands. We do not have any, but we managed to succeed didn’t we? FLC has turned swamp and wasteland into golden lands. And key to success is sufficiently large scale.
Regarding FLC resorts, no one would invest in if the project were carried out on a land with total area of only tens of hectares. However, if it were hundreds or even thousands of hectares, everyone would see it as a brand-new city and be increasingly eager to buy.
When I developed the FLC’s first luxury resort in Sam Son on a swamp, no one believe in my success. But everyone has come to realize it.
While Bamboo Airways is only a brand-new airline, how to generate a large passenger traffic in response to the large-scale investment in air fleet?
When we launch, tens of our aircrafts that carry passengers to FLC resorts are not even enough, especially South Korean passengers. They have ordered charter flights before Bamboo Airways officially comes into operation.
Their reason to choose us is very simple. In many case, FLC Group charges them airfare and offers free room charge that no other local airlines could. Besides, FLC Group could also offer other free service fees such as playing golf…
FLC resorts with thousands of rooms will probably bring about the great number of potential passengers. With these above-mentioned advantages, revenue will definitely grow substantially given its integration in the FLC resort ecology system. Thus, like I once said, upon its launch, Bamboo Airways will earn profits.
Upon FCL’s receiving the license and completing the final procedures, FLC stock price is on the decrease. What do you think about that?
Listing on the stock exchange is aimed at demonstrating the transparency and widely promoting the Group among the public. The stock prices depends much on the market demands and supplies, which does not matter to me. Vietnam’s stock exchange is not New York Stock Exchange that could be used as a benchmark for assessing the health of a company.
Comment