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Airlines Undeterred by Vietnam Political Snags : Travel: U.S. carriers lay groundwork for flights while awaiting diplomatic normalization.

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From Associated Press

U.S. airlines eager for business in Vietnam are finding that politics still hampers them, despite the end of America’s 19-year economic embargo.

The United States lifted sanctions against Vietnam on Feb. 3, but it has yet to establish diplomatic relations with its onetime enemy. The normalization of relations usually precedes the signing of the aviation agreements that allow regular passenger flights.

In the interim, Delta, United, Northwest and Continental are taking intermediate steps to establish service to Vietnam, including coordinating schedules and ticket sales with Vietnam Airlines, the state-owned flag carrier.

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Airline industry analysts say demand for flights to Vietnam has strong long-term potential, although they hesitate to quantify it. They say the country is inadequately served by existing carriers.

“It’s simply a function of the fact that new routes are going to be given out to Vietnam,” said Candace Browning, an analyst at Merrill Lynch & Co. in New York. “That’s the reason everyone’s interested.”

U.S. airlines are working to make up for lost time.

Delta Air Lines signed a letter of intent last month with Vietnam Airlines for joint scheduling and marketing; it expects a formal agreement this year.

United Airlines, which signed an agreement with Vietnam Airlines in February, 1993, applied to the U.S. government for permission to fly from Los Angeles to Ho Chi Minh City, formerly Saigon. Northwest Airlines has asked for approval to fly from Detroit to Ho Chi Minh City via Tokyo.

And Continental Airlines in February renewed a request for permission to fly to Vietnam via Guam, its Pacific hub.

Freight shipments between the two countries also stand to gain. Federal Express Corp. of Memphis, Tenn., plans to start cargo flights this month to Hanoi, Danang and Ho Chi Minh City.

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Although the United States has not said when it might establish full diplomatic relations with Vietnam, Vietnam Airlines stands ready to negotiate an air services agreement, said Nguyen Duc Vinh, the company’s deputy director general.

The airline hopes to fly its own jets to the United States as early as this year, said Dao Manh Nhuong, deputy director general of Vietnam’s civil aviation administration. At stake is an expected surge in air travel to Vietnam by business people, war veterans, tourists and Vietnamese Americans, who number about 1 million.

Nhuong estimates Americans could account for up to 30% of airline passenger traffic to Vietnam by 1995.

The increased business may result in a boom for aircraft manufacturers.

But the end of sanctions hasn’t brought any quick sales for Seattle-based Boeing Co., the U.S. aircraft maker favored by Vietnam Airlines.

Robert Laird, Boeing’s regional sales director, has made 14 trips to Hanoi during the past two years, positioning his company for a part in the airline’s plan to spend $1 billion on fleet expansion by 2000.

“Vietnam is an untapped aviation market with enormous potential, so there are a lot of people beating the doors down to talk with them,” Laird said during a recent visit here.

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The company expects to sell 60 to 80 aircraft--worth $3 billion to $5 billion--over the next 10 to 15 years, Laird said. It must compete, of course, with the two other makers of large passenger jets, Europe’s Airbus Industrie consortium and St. Louis-based McDonnell Douglas Corp.

Boeing’s years on the commercial sidelines may have hurt its prospects here, Laird acknowledged. But he predicted that Vietnam Airlines, which plans this year to expand its network to fly to France, Germany and Japan, will buy aircraft from more than one supplier.

The company plans to buy 30 to 40 new aircraft by the end of the century in its bid to become a leading Southeast Asian regional carrier.

“In the next 10 to 15 years, they could easily become the size of a Thai Airways, a Cathay Pacific or a Singapore Airlines,” Laird said.

Vietnam Airlines owns 18 planes, 16 of which are Soviet-built Tupolevs, Ilushins and Yakolevs--all at least a decade old. The airline uses Soviet planes only for domestic flights, and it hopes to phase them out completely by the end of 1995, Nhuong said.

Vietnam Airlines leases two Boeing 767s and five Airbus A-320s with foreign pilots and crews for its international flights.

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