Budget air market heats up

Viet Nam-based air carriers operating domestic and international flights are expected to encounter tougher competition when the new budget airline Vietjet-AirAsia becomes operational in May this year.

The new low-cost carrier, which was established after Viet Nam’s first private low-cost carrier Vietjet Aviation Joint Stock Co (Vietjet Air) sold a 30 per cent stake to Malaysia’s AirAsia Bhd, offers passengers opportunities to fly at lower prices and also a wider variety of destinations to choose from.

AirAsia representative in Viet Nam Bui Duc Hanh said procedures for the purchase had been completed and that the share acquisition was approved by the Ministry of Transport on February 9.

The establishment of the new air joint venture is expected to take back the slice of the domestic aviation market that had fallen into the hands of national flag carrier Viet Nam Airlines and Jetstar Pacific Airlines when Indochina Airlines had its licence revoked earlier this year.

Trinh Hong Quang, deputy general director of Viet Nam Airlines, was quoted by online newspaper VietNamNet as saying that the new joint venture’s partner, AirAsia, had begun Viet Nam services five years ago. He added the country’s aviation market was still undergoing development and offers equal opportunities for every airline that competes for a share in it.

Despite the losses suffered by the Jetstar Pacific Airlines (JPA) in 2009, the general director of the joint stock company, Le Song Lai, said he remained optimistic about the expansion of the domestic aviation market.

Although local airlines have expressed their optimism about the future development of the local aviation market, there were concerns about the newcomer’s competitiveness because as a private carrier, Vietjet-AirAsia can be flexible about making business decisions.

Viet Nam Airlines is a 100 per cent State-owned company while JPA is a joint stock company in which the State holds a 70 per cent stake.

In a statement released on Wednesday, AirAsia said the joint venture with Vietjet would help AirAsia enhance the company’s ASEAN regional expansion plans by providing the airline with additional routes and destinations.

Meanwhile, in addition to the plan to launch the Ha Noi-Yangon air route in early March, national flag carrier Viet Nam Airlines has increased its flights on the HCM City-Bangkok route, from one to two daily flights from December 2009, and has enhanced its air route networks linking Viet Nam with Laos and Cambodia.

VietNamNet/Viet Nam News

Tags: Vietnam aviation