Vietnam's Aviation Safety Given U.S. Approval, Key to Expansion

(Bloomberg) -- The U.S. Federal Aviation Administration on Thursday gave its approval to Vietnam’s air-safety system, which will allow the Southeast Asian country’s airlines to fly to the U.S. as it seeks to bolster tourism. Vietnam’s national carrier is planning flights to California.

The FAA gave Vietnam a Category 1 rating, meaning U.S. reviewers found that the country adheres to United Nations standards for licensing pilots and overseeing airline operations and safety, the agency said in a press release.

“The Category 1 status announced today is based on an August 2018 FAA assessment of the safety oversight provided by the Civil Aviation Administration of Vietnam,” the FAA said in its statement. The FAA hadn’t previously assessed Vietnam’s aviation regulation system.

Vietnam Airlines JSC for years has planned flights to the U.S. West Coast, home to a large population of Vietnamese-Americans. The carrier is considering a Ho Chi Minh City-San Francisco flight to be its first U.S. route, Chief Executive Duong Tri Thanh said in May.

President Donald Trump and North Korea’s Kim Jong Un are planning on meeting in Hanoi, the Vietnamese capital, on Feb. 27 and 28 for their second summit.

Not only can a Vietnamese airline now apply to fly to the U.S., but carriers can also enter into so-called code-share agreements with other airlines to book passengers on each other’s flights.

A Vietnam-U.S. route, which could provide a marketing bonanza for the nation’s tourism industry, would probably be a money-loser for Vietnam Airlines or any other local airline because of fiercely competitive routes linking the two countries.

“Having flights to the U.S. is symbolic, prestigious,” said Brendan Sobie, a Singapore-based analyst at CAPA Centre for Aviation. “It’s being pushed by the government. But it’s very hard to make that route profitable. It’s a license to lose money.”

Still, gaining a Category 1 ranking is a sign of Vietnam’s maturing aviation market.

The nation’s economy, expanding at about 7 percent, is giving Vietnamese more disposable income to fly. Vietnam’s airports handled 106 million passengers in 2018, an increase of about 13 percent over the previous year, according to the Civil Aviation Authority of Vietnam. Vietnamese carriers flew more than 50 million passengers last year, up 14 percent from 2017.

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