AirAsia wants to withdraw capital from VietJet Air

Malaysian airline AirAsia is requesting to withdraw capital from the private carrier VietJet Air as they have not reached agreement on brand name.

AirAsia is holding 30 percent stake in the total 600 billion dong chartered capital of VietJet Air.

VietJet Air’s spokesperson confirmed that AirAsia wants to divest from the carrier.

However, it is only an intention as the two parties are still negotiating to solve the problems. According to VietJet Air, AirAsia is still their shareholder at present. If the negotiation were not successful and AirAsia still wanted to divest, VietJet Air would still be determined to overcome the difficulties to start flying this year.

According to VietJet Air, its most difficulty is the brand name issue. According to the latest document issued by the aviation authorities, foreign firms cooperating with Vietnamese firms are not allowed to use their logos and images. VietJet Air added that for almost a year, it has not been able to solve this issue.

In February 2010, AirAsia announced to buy 30 percent of VietJet Air’s stake to become the only foreign shareholder of this carrier. The two parties expected to operate commercial flights in and out of Vietnam under VietJet AirAsia brand name. However, for nearly a year, the brand issue has caused AirAsia to no longer be interested in cooperating.

Meanwhile, to end of May, the traffic right will expire if VietJet Air does not start running the service.

In fact, similar story involving brand issue has happened with Jetstar Pacific from 2008 to date, and it has not been finalised. The Civil Aviation Administration of Vietnam (CAAV) said that the use of the “Jet”, “Jetstar”, and the star symbol of Jetstar Pacific, which are similar to the Australian aviation firm could cause misunderstanding.

Meanwhile, Jetstar Pacific said that its commercial franchise on brand name with the Australian partner complies with the law of Vietnam and international practices.

However, CAAC and Ministry of Transport retained their perspective that Jetstar Pacific must change their logo. Having no other choice, this aviation firm had to repaint all of its aircrafts and changed the logo, at extremely expensive cost.

The brand issue that happened with Jetstar Pacific, now with VietJet Air, has made many people to question that whether barriers on brand name should be issued. Small aviation firms in the country will be very difficult to compete with large firms without cooperating with large international corporations. This was evidenced by what happened with Indochina Airlines when the its owner Ha Hung Dung still pursues flying dream but is in failure due to limited capital budget.

On December 7, 2007, VietJet Air became the first private airline in Vietnam to be licensed.

This firm has repeatedly postponed their flying plan due to the difficulties in the aviation market. As estimated, it has cost the firm over 100 billion dong to maintain the operation without running the service. – Vietbiz24

Tags: AirAsia, VietJet Air