Tourism and Panasonic

Hope everyone had a nice weekend. I was off yesterday to celebrate the US Memorial Day. If you were too, happy Memorial Day. If not, hope you didn’t miss me too much.

Mostly tourism today, although an article about Panasonic caught my eye:

Tourism: We are getting a sense now about how the Vietnamese government will deal with the dramatic drop in tourism revenues. April visits were down 98%, and May is going to be the same. June will probably be close to that, even with international flights opening up. No one is really traveling internationally right now, and there is still a quarantine in place for all visitors. Iceland will open up in June, and it will require testing at arrival and throughout the first two weeks.

Source: World Travel & Tourism Council, chart by Vietecon.com

Remember that tourism is extremely important for Vietnam. It contributed over $16 billion to Vietnam’s economy in 2019, according to the World Travel & Tourism Council. And the country was looking for solid growth this year (pre-COVID, of course). Plus, while it is more than 6% of GDP, it also employs a lot of people - 3.3 million in total. [Note that the Reuters article says tourism made up 12% of GDP or $31bn - not sure where this comes from. I went with the more conservative, lower number.]

So Vietnam is now promoting more domestic tourism, which is likely to be less lucrative, but hopefully more stable.

To lure local travellers, hotels and airlines have cut prices by as much as half, Vu The Binh, chairman of Vietnam Society of Travel Agents, and vice chairman of the Vietnam Tourism Association, told Reuters.

It is going to be hard to replace all of those international dollars with domestic spending, especially at these prices. However, in the long term, it is good to promote domestic tourism, because it can be much more stable.

FYI, if your tourist visa is expired, you can extend it to June 30 for free. Although it looks like you need a letter from your consulate or embassy.

Air travel to the US: The first direct flights to the US happened this month to repatriate Vietnamese during the pandemic, and there is hope that this will lead to more direct flights as Vietnam is now cleared by the FAA. I saw this post on the potential for direct air travel between the two countries, and I was surprised that the issue is price, not number of passengers.

Over 900,000 people flew between Vietnam and the USA last year, according to OAG Traffic Analyser. Ho Chi Minh City is by far the key Vietnamese city for US traffic. Ho Chi Minh – Los Angeles was the largest unserved market, with 193,000 local passengers. San Francisco was next, with 137,000; adding San Jose, with the most Vietnamese diaspora in the US, the Bay area increases to about 145,000.

That’s probably enough to justify a flight, especially one that flies just a couple of times a week. But air fares between them appear to be about a third lower per kilometer than similar flights to/in Asia. Unless fares rise (and it seems like COVID-19 will likely keep them low for a while), it might not make sense to open up the route.

The author of the post seems to think Bamboo is the obvious choice to start flying between HCMC and LA, but I would assume that Vietnam Airlines would, as the national carrier, would be the first. The problem with Vietnam Airlines is that it would have a higher cost base (presumably), but still wouldn’t be able to charge a premium price.

Terminal 3 in HCMC: One more tourism story, the PM has agreed to the expansion at Tan Son Nhat airport. The new terminal will have capacity for 20 million passengers at a cost of $472m (VND11tr). Construction will start in October 2021 and finish in mid-2023. Not soon enough for me.

Finally, Panasonic is moving from Thailand to Vietnam: Just another article that talks about supply chains moving to Vietnam. Now it is Panasonic moving white goods production from Thailand to Vietnam. It’s different because its not moving from China to Vietnam! Panasonic is looking to save money.