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Aircraft makers battle for Vietnam orders

Aircraft giants Boeing and Airbus are competing to sell their new jetliners to Vietnam while Bombardier of Canada is also fighting for a slice of the fast-growing market.

Air travel is taking off in the communist-ruled country of 84 million where the economy is growing at more than eight percent a year and a new middle class is taking to the skies for both tourism and business travel.

State-run Vietnam Airlines, soon to be part-privatized, plans to modernize its fleet of 45 aircraft -- a mix of Boeing, Airbus, ATR and Fokker planes -- to compete against a slew of foreign carriers and new budget airlines.

"We want to be one of the leading regional carriers," said Vietnam Airlines general manager for corporate affairs Bach Quoc Thang. "Singapore Airlines and Cathay Pacific are the examples we want to follow."

The airline is also considering turning subsidiary Vietnam Air Service Co into a low-cost carrier, sources say, to take on Pacific Airlines, part-owned by Qantas, and AirAsia, now in partnership with ship-builder Vinashin.

Vietnamese Prime Minister Nguyen Tan Dung is expected to make a decision soon on buying new long-range jets for Vietnam Airlines, and lobbying has intensified for the big-ticket orders from US manufacturer Boeing and European rival Airbus.

Montreal-based Bombardier Aerospace has also joined the fray, taking its 90-seat CRJ900 NextGen jet, launched this year, to Vietnam last week, saying it could fly domestic and Asian routes at the lowest fuel cost per seat.

"This would be an ideal feeder aircraft for Vietnam's domestic and regional air transport needs," said Trung Ngo, vice president of Bombardier, adding that airlines such as Lufthansa and Air France have used their jets since the 1990s.

To secure financing for any new planes, Vietnam's first aircraft leasing company has just been set up by Vietnam Airlines, Vietindebank, Petrovietnam and telecom group VNPT, with initial capital of US$200 million.

Vietnam Airlines now operates 45 aircraft -- 10 Boeing 777, 10 Airbus A320, 10 A321, three A330, 10 French-made ATR-72 and two Fokker-70. It will receive five more A321 next year and four Boeing 787-8 Dreamliners from 2009.

It is also in negotiations to acquire as many as 14 to 16 more Boeing 787-8 or 787-9 jets on a lease/purchase basis while also talking with Airbus, subject to the government's final decision, industry sources say.

Some industry watchers had expected news of a major Boeing deal a year ago when US President George W. Bush visited Hanoi, or during Vietnamese President Nguyen Minh Triet's US trip in June, but no agreement was announced.

Vietnam Airlines executive vice president Nguyen Van Hung gave little away about when a decision might be made.

"I think it will be soon since the government of Vietnam is now considering and studying the fleet development project of Vietnam Airlines," he said.
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