Carriers look to wing it into aviation

>> AirAsia calls off Vietnam joint venture

In mid October 2011, Asia’s largest low-cost air carrier AirAsia unveiled its decision not to purchase 30 per cent stake in Vietnam-based VietJet Aviation Joint Stock Company (VietJet)’s VND600 billion ($29 million) chartered capital. The deal dropped because the two partners could not reach an agreement on AirAsia brand usage in commercial activities.

This was AirAsia’s second trial to team up with a local partner to make inroads in Vietnam’s low-cost aviation market. In August 2007, the Malaysia-based airline intended to join hands with Vinashin to open a low-cost aviation joint venture.

AirAsia is making constant efforts to raise its share in low-cost aviation market segment against regional rivals such as Australia-backed Jetstar Pacific Airlines, India-based GoAir and Philippines-based Cebu Pacific.

From December 16, 2011 AirAsia will  open a new route flying directly from Kuala Lumpur to Danang city four times per week.

For its part, VietJet Air, still confirmed it has finalised technical and human resources preparations to get its first proposed commercial flights up in the air from late 2011.

At the inception, VietJet Air will fly some local routes including Hanoi-Danang, Hanoi-Ho Chi Minh City and Danang-Ho Chi Minh City. In the next step, the low-cost airline will expand its wings to other locations in South East and Northeast Asia such as Bangkok, Singapore, China, South Korea and Japan, according to the low-cost airline’s executives.

However, since its foundation in 2007, the airline regularly backed down on promises to start flying.

Besides, according to Vietnam Civil Aviation Administration of Vietnam’s deputy chief Lai Xuan Thanh, VietJet Air was yet to procure the air operator certificate (AOC) or give reports on its aircraft leasing plan to relevant state agencies.
Jetstar Pacific is the only foreign-backed airline operating in Vietnam. Jetstar Pacific is also Vietnam’s first low-cost airline whose 30 per cent stake is held by foreign shareholder Australia-based Qantas Airways.

Besides VietJet Air, another local private airline Air Mekong reportedly wanted to team up with US-based Sky West through selling its 30 per cent stake to the foreign partner, but it has not been green-lighted by the government.