New challenge for Jetstar in Vietnam
KUALA LUMPUR – AirAsia has acquired a 30 percent equity stake in VietJet Air to establish a Vietnam-based joint venture low-cost airline which will carry the name VietJet AirAsia.
The new carrier will compete for business with Qantas-backed Jetstar Pacific.
VietJet AirAsia will be operating both domestic and international flights. It is currently finalising details regarding routes, frequencies and launch of flights.
The formation of VietJet AirAsia makes Vietnam AirAsia’s fourth country base, following Malaysia, Thailand and Indonesia.
“The joint venture is a well-balanced combination of the management system, technical expertise, long-term experience in the airline industry, crew and international brand of AirAsia, and the financial strength, as well as Vietnamese market insights of VietJet Air,†said a VietJet Air spokesman.
The move by AirAsia comes at a time when Jetstar Pacific – 27 percent owned by Qantas and 70 percent owned by Vietnam government’s State Capital Investment Corporation – is facing difficulties in Vietnam with two of its executives being probed for fuel hedging activities in 2008 and 2009.
The two executives have been barred from leaving Vietnam since Christmas, while Jetstar Pacific’s former chief executive was arrested last month over allegations he caused serious losses.
Last year, Vietnam’s Ministry of Transport ordered Jetstar Pacific to cease using the branding and orange star logo common to all Jetstar operations by October this year.
AirAsia’s entry into Vietnam shows it will compete aggressively against Jetstar in Asia despite the two airlines last month forming a strategic alliance aimed at reducing costs.
VietJet’s share of the travel market in Vietnam is less than 7 percent, dwarfed by Vietnam Airlines (at about 70 percent) and Jetstar Pacific (about 23 percent).
FOOTNOTE: AirAsia has signed an agreement to be the title sponsor of the 2010 AirAsia British F1 Grand Prix at Silverstone.
Ian Jarrett
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