Bamboo Airways plans 2020 launch amid Vietnam tourism boom

Bamboo Airways, which only started operations in January this year, is already planning an IPO — not in the distant future, but in 2020, chairman Trinh Van Quyet told various media outlets this week. . He did not say which exchange Bamboo will be listed on.

Going from launch to IPO in less than two years is sure to set an airline record. But lately, in a frenzy of development, aspirations have turned into fast-changing plans. That casts doubt on Bamboo’s 2020 IPO and positioning of the larger business, and whether the constrained airline has room for Bamboo to expand.

Bamboo hopes to raise a small $100 million from the IPO, which will only buy about two narrow-body planes instead of the one wide-body 787 that Bamboo plans to buy to fly to the United States. Bamboo is owned by FLC Group, a local conglomerate that spans real estate and leisure travel. As Vietnam’s economy has been privatized, its private ownership reflects the ambitions and capabilities of non-state-owned enterprises.

As a full-service airline, Bamboo is a rare start-up in the Asian aviation industry. In the past decade, most start-ups outside mainland China have been low-cost carriers. Bamboo’s fleet consists of 10 aircraft and has received government approval to grow to 30 by 2023.

Ambitions are also seen in VietJet, a privately owned low-cost airline that has rapidly grown to about 70 aircraft. Apart from a smaller subsidiary in Thailand, Vietjet remains largely disciplined about its business model. Bamboo has undergone some evolutions in its short history.

Quyet told the Financial Times in June that Bamboo would lease used A380s to accelerate growth, but Bamboo was quick to say this was just an abandoned study.

The industry expected Bamboo to adopt wide-body aircraft until Bamboo received its first 787 order from Boeing. This seemed to be confirmed when a second-hand A330 in the Bamboo livery turned up ready for delivery by a European paint shop. Bamboo dismissed it as a media rumour, but did not comment on the fact that an aircraft was expensively painted in Bamboo’s livery.

The A330 saga, taken over by Bamboo, has announced a new development: It will lease the 787-9 from an undisclosed company and bring it into service this year, rather than its own 787 freshly rolled out of a Boeing factory. Boeing 787 deals have been limited so far, they are still relatively new, and leased planes will only arrive before own planes.

Bamboo’s fleet of narrow-body aircraft is a long-term concern. In its quest for breakout expansion, Bamboo has drawn on a hodgepodge of used aircraft, in addition to its own new aircraft. A mixed fleet is inefficient, and lease contracts are often multi-year, meaning that as Bamboo matures, it will have to wait out contracts or pay penalties for early returns.

Industry watchers wonder how it will accommodate Vietnam’s growth. The country’s airports are as crowded as many international destinations. Questions have also been raised about how the government views fast-growing private airlines taking market share from state-owned Vietnam Airlines, the full-service airline that also owns low-cost carrier Jetstar Pacific.

Vietjet’s growth appears to be enough to challenge the status quo that preceded Bamboo’s entry. Other start-ups are also in the pipeline, with three airlines looking to operate in Vietnam: Vinpearl, Vietravel and KiteAir.