AirAsia sets up low-cost airline in Việt Nam

vietnam news

Update: April, 04/2017 – 18:00


AirAsia Berhad, the Malaysian budget airline, plans to start a low-cost carrier in Việt Nam by co-operating with local businesses. — Photo


HÀ NỘI — Malaysian budget airline AirAsia Berhad plans to start a low-cost carrier in Việt Nam, co-operating with local businesses to enter the country’s booming travel market, company representatives told Việt Nam News.

AirAsia signed a shareholders’ agreement with Việt Nam’s Gumin Company Limited, Hải Âu Aviation Joint Stock Company and Trần Trọng Kiên, the owner of these two companies, to form the venture last Friday, which the airline announced in a statement to Malaysia’s stock exchange.

The carrier, expected to start flying at the beginning of 2018, will need an investment of VNĐ1 trillion (US$44 million), of which AirAsia will hold 30 per cent stake and Gumin will hold 70 per cent.

Việt Nam is the latest country to lure Malaysian billionaire Tony Fernandes, head of AirAsia, who is aspiring to build a low-cost airline network covering Asia, as the 28 per cent growth in Việt Nam’s aviation market triples the rate in other Southeast Asian countries.

Việt Nam is also the fifth biggest aviation market in the region, after Indonesia, Thailand, Malaysia and Singapore, with a passenger volume that has doubled since 2013 thanks to a middle class population accounting for 25 per cent of the total population by 2010.

In recent years, AirAsia has established affiliates in Indonesia, Thailand, India and Japan. The airline is betting on low cost airline models for international travel through its AirAsia X subsidiary.

Fernandes has also ordered hundreds of Airbus aircraft worth billions of dollars to meet his ambition of growth, and he is in the process of selling a subsidiary specialising in leasing aircrafts to raise cash.

However, Brendan Sobie, CAPA Centre for Aviation’s analyst, told Bloomberg that AirAsia would face huge challenges, because it entered the Vietnamese market too late. “The market is currently well served by two carriers, VietJet Air and Jetstar Pacific. The growth rate will slow down in the coming years, as the low-cost market is now more mature. ”

Vietjet Aviation Joint Stock Company shares have grown 52 per cent since its listing on HCM Stock Exchange in February 28.

According to a report released by ACB Securities in December last year, passenger traffic in Việt Nam will continue to grow at double digit rates over the next decade, after an annual growth of 17 per cent in the last decade. — VNS

This entry was posted in Doanh nghiệp có vốn nước ngoài - Foreign invested enterprises, Economics - Kinh tế, Foreign Direct Investments - Đầu tư trực tiêp từ nước ngoài and tagged , by Trần Đình Hoành. Bookmark the permalink.

About Trần Đình Hoành

I am an attorney in the Washington DC area, with a Doctor of Law in the US, attended the master program at the National School of Administration of Việt Nam, and graduated from Sài Gòn University Law School. I aso studied philosophy at the School of Letters in Sài Gòn. I have worked as an anti-trust attorney for Federal Trade Commission and a litigator for a fortune-100 telecom company in Washington DC. I have taught law courses for legal professionals in Việt Nam and still counsel VN government agencies on legal matters. I have founded and managed businesses for me and my family, both law and non-law. I have published many articles on national newspapers and radio stations in Việt Nam. In 1989 I was one of the founding members of US-VN Trade Council, working to re-establish US-VN relationship. Since the early 90's, I have established and managed VNFORUM and VNBIZ forum on VN-related matters; these forums are the subject of a PhD thesis by Dr. Caroline Valverde at UC-Berkeley and her book Transnationalizing Viet Nam. I translate poetry and my translation of "A Request at Đồng Lộc Cemetery" is now engraved on a stone memorial at Đồng Lộc National Shrine in VN. I study and teach the Bible and Buddhism. In 2009 I founded and still manage on positive thinking and two other blogs on Buddhism. In 2015 a group of friends and I founded website CVD - Conversations on Vietnam Development ( I study the art of leadership with many friends who are religious, business and government leaders from many countries. In October 2011 Phu Nu Publishing House in Hanoi published my book "Positive Thinking to Change Your Life", in Vietnamese (TƯ DUY TÍCH CỰC Thay Đổi Cuộc Sống). In December 2013 Phu Nu Publishing House published my book "10 Core Values for Success". I practice Jiu Jitsu and Tai Chi for health, and play guitar as a hobby, usually accompanying my wife Trần Lê Túy Phượng, aka singer Linh Phượng.

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