Vietnam Airlines, Air France sign deal to boost routes

Vietnam Airlines and Air France signed a joint venture Tuesday to increase routes between Europe and Vietnam, as they try to capitalise on a fast-growing appetite for travel to and from Southeast Asia.

The deal, to take effect from November 1, could see destinations in Vietnam increase to 20 from three today, and destinations in France and the rest of Europe soar to around 70 from the current 14, according to Patrick Roux, senior vice president of Air France-KLM. 

The stronger cooperation, which will include coordinated flight schedules, will give the French carrier a foothold in a region already well-served by other large airlines.

Air travel has boomed in Southeast Asia in recent years, with Vietnam -- and its rapidly-rising middle class -- emerging as a bright spot. 

Domestic passenger numbers surged to 28 million last year from 12 million in 2012, according to the Centre for Aviation.

Vietnamese travellers are also increasingly flying abroad, both within the Asia-Pacific and to destinations in Europe. 

Vietnam Airlines said the joint venture would allow airports in both France and Vietnam to become key transit hubs. 

Vietnam has become a popular destination for international visitors, as well as a jumping-off point for regional travel. 

More than 10 million foreigners travelled to Vietnam last year, a 26 percent increase from the year before. That included more than one million from western European countries, according to the Vietnam National Administration of Tourism. 

But some warned that the country could struggle to establish itself as a key transit hub for the region. 

"Vietnam Airlines doesn't quite have the penetration into the market that other regional carriers do," said Greg Waldron, Asia managing editor at Flightglobal.

Air France was the first western airline to serve Vietnam in 1930, when it was known as Air Orient. The inaugural trip took three days and made 18 stops. 

The first direct flight between Vietnam and Paris was launched in 2003. Vietnam Airlines and Air France now between them carry an average of 400,000 passengers annually between the countries.   

Japan's ANA Holdings has an 8.8 percent stake in Vietnam Airlines while the government owns the majority.

Air France CEO Franck Terner said his airline has no plans to buy a stake in the Vietnamese carrier.