Despite the ongoing Middle East war and unfavourable market conditions, VietJet Thailand remains committed to replacing its fleet with 50 new Boeing 737-8 planes over three years, while accelerating plans to phase out its existing Airbus jets to streamline costs.
The airline has also hinted at becoming the first low-cost carrier in Thailand to fly to Europe if it takes delivery of wide-body Airbus A330neo planes from VietJet Air, which recently announced a new direct route from Hanoi to Prague, starting in October this year.
Chief executive Woranate Laprabang said that, as travel demand is expected to recover during the upcoming high season, with jet fuel prices hovering around US$120 per barrel, there was no need to slow plans to completely replace the Airbus A320 and A321 fleet with Boeing 737-8 aircraft.
By the end of this year, VietJet Thailand is expected to operate 29 planes, with only four Airbus jets remaining in its fleet.
By 2028, it expects to have a total of 50 Boeing 737-8 planes and carry around 10 million passengers, up from 7 million at present.
It is also exploring opportunities to add wide-body jets and commence long-haul routes for the first time, possibly as early as next year.
Mr Woranate said that aggressive fleet expansion is even more crucial amid rising jet fuel prices, as the airline has been using the new aircraft since February and has seen fuel consumption decrease by 20%.
The more efficient aircraft has also significantly helped the airline improve its on-time performance (OTP) rate to over 80% despite heavier traffic in April, placing it among the top performers in Southeast Asia alongside full-service carriers such as Thai Airways and Singapore Airlines.
He said that sustaining a high OTP rate will remain a key operational target in the long term.
To avoid bloated operations, he said the airline would phase out its existing Airbus A320 jets more quickly. For example, it will return nine of them this year, up from six previously planned.
From mid-2027, VietJet Thailand's fleet will be completely replaced by Boeing planes, which will help to further control maintenance and operational costs through a single fleet type.
Mr Woranate said the extended range of seven flight hours offered by the new aircraft type also enables the airline to fly directly to Tokyo, as it is preparing to increase this service from seven to 11 flights per week from November.
FARE HIKES AHEAD
However, Mr Woranate said average airfares would not be as low as in the past due to surging fuel prices. New bookings made after fare adjustments typically face increases of around 20%.
For instance, fares on Japan routes have risen to 20,000 baht, from 15,000 baht. Those seeking extra-low fares can still rely on promotional offers, but these may be less available on each flight, as the airline must maintain profitability amid rising fuel costs.
Unlike other carriers, he said the airline does not adopt a fuel hedging strategy, instead conducting currency hedging to protect against exchange rate fluctuations.
"Even though Jet A-1 fuel prices have fallen from a peak of over $200 per barrel, we still expect prices to remain above the pre-war baseline of $80 for another two years, mainly due to disruptions to production in the Middle East," he said.
Mr Woranate said the impact this time is more severe for airlines in some respects than during the pandemic.
During the border shutdowns in 2020, he said all operations were frozen and, therefore, the airline did not incur flight operating costs, while suppliers helped defer some expenses as airlines had virtually no income.
But in the current environment airlines still have to operate with higher costs, which cannot be fully offset by increased airfares and other revenue sources.
Pinyot Pibulsonggram, head of commercial at VietJet Thailand, said the airline will continue to operate routes with high load factors, such as those to Japan, which consistently attract load factors of more than 85% during the low season and over 90% during the high season.
It will also focus more on international routes, banking on fifth-freedom rights to stop in countries with strong passenger demand before flying to final destinations.
The airline is also planning to launch two new routes -- Phuket-Taipei-Fukuoka and Bangkok-Phuket-Perth -- early next year.
