AirAsia partnership limited by authorities

Hai Au Aviation and AirAsia's new partnership will miss out on international operations

MoT officially responded to the proposal of the Hanoi Department of Planning and Investment (HDPI) regarding adjustments in Hai Au Aviation’s investment certificate after the domestic airline announced intentions to accept the investment from Malaysia-based AirAsia Investment.

After receiving foreign investment, Hai Au Aviation also had another scheme of raising its charter capital from VND100 billion ($4.4 million) to VND1 trillion ($44 million), 30 per cent of which would belong to AirAsia.

Along with the intention of raising the market cap, Hai Au Aviation planned to register other businesses, some of which are not included in the list of services under Vietnam's WTO commitments, such as air transport support services (746), commodity loading and discharging (7419), passenger carriage (CPC 7311, 7312), aircraft services with pilot included (CPC 734), and air ticket services.

According to MoT’s respondent, Hai Au Aviation’s business sectors are being narrowed down.

In particular, in the field of air transport support services, Hai Au Aviation, with 30 per cent of foreign ownership¸ is solely permitted to provide two business lines: aircraft services, except for cargo services (CPC7461), and other airfreight support services (CPC7469).

In terms of air traffic control (ATC), MoT asserted Hai Au Aviation was permitted to provide ATC services even after transferring 30 per cent of the enterprise’s stake to the foreign investor.

Le Dinh Tho, Deputy Minister of Transport, noted that the co-operative link Hai Au-AirAsia could only provide services for commercial passengers in the domestic market, similarly to other airlines, such as Vietnam Airlines, Vietjet, Vasco, and JPA in case the authority upgrades Hai Au-AirAsia’s general aviation business licence to an air transportation business licence.

It was implied that the minimum amount of investment, VND300 billion ($13.2 million), would not please the young founder of AirAsia, Tony Fernandes, as the Kuala Lumpur-headquartered airline could only provide domestic commercial flights for individual passengers, carry-on luggage, commodities, post and parcels, whereas AirAsia was more keen on international operations.

However, the airfreight business registration has been thoroughly and legally assessed by the government to assure the security and safety of the aviation field at all costs.

Previously, in April, the government issued a notice approving the investment policy for the air transport projects and air transport licence for Vietstar Airline after constructing the passenger terminal and aircraft apron according to the decision approving the master planning of Tan Son Nhat International Airport until 2020.

“The Hai Au-AirAsia alliance must convince the government, especially about the benefits brought to passengers, if they wish to earn a licence from the government in the anytime soon,” an expert suggested.

Earlier in June, according to newswire The Guardian, an AirAsia flight, coded D7237, encountered technical problems and was forced to return to Perth, the airport of departure, instead of heading towards the destination of Kuala Lumpur.

ABC reported one passenger had felt the turbulence during the flight and that the plane was trembling like a “washing machine.”

The turbulence caused the aircraft to plunge from 32,000 feet to 10,000 feet without warning, leaving passengers in distress, according to newswire The Jakarta Post.

Fortunately, the crew handled the situation quite well despite the 90-minute expansion of the trip from Perth to Kuala Lumpur.

Hai Au Aviation was founded in 2011 as a member of the Thien Minh group, a travel and hospitality group in Southeast Asia. The aviation company specialises in commercial seaplane services in Vietnam, which enables customers to traverse to tourist destinations.

AirAsia is a Malaysian carrier which operates domestic and international flights to more than 165 destinations spanning 25 countries. AirAsia is one of the world’s largest low-cost airlines.

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