AirAsia sets up Vietnam low-cost airline

AirAsia, a major low-cost airline in Asia, said it has purchased a 30 percent stake in VietJet Aviation of Vietnam to establish a budget carrier based in the country.
AirAsia’s Vietnam representative office sent out a statement Thursday saying that the new carrier will be called VietJet AirAsia.
AirAsia said in a statement late Wednesday from Kuala Lumpur that the Ministry of Transportation of Vietnam approved the share acquisition on Tuesday, February 9. It did not reveal how much it paid for the acquisition.
The new carrier will be operating both domestic and international flights, AirAsia said. It is currently finalizing details regarding routes, frequencies and launch of flights.
The formation of the new airline makes Vietnam AirAsia’s fourth country base, following Malaysia, Thailand and Indonesia.
AirAsia said it joined the venture to expand its reach in Vietnam and open the country as another gateway in the ASEAN region.
It added the joint venture “will be tapping be tapping the expertise of both AirAsia and VietJet Air for the successful operation and marketing of low-cost flights.”
Subject to regulatory approval, the venture is expected to start operations either in April or June this year.
VietJet Air was licensed to operate in December 2007 as a partnership of SOVICO Holdings (an established corporation with interests in banking and finance, real estate, plantation and power plants), T&C Group and Ho Chi Minh City Housing Development Bank, or HDBank.
However, VietJet Air has not launched its flights due to fuel price fluctuations and the global economic downturn that began late 2008.
Vietnam has so far approved three private airlines namely VietJet Air, Indochina Airlines and Mekong Aviation. Indochina Airlines stopped flights in November last year due to losses. Mekong Aviation had plans to start operations this year on domestic routes but no developments have been seen so far.
Meanwhile, there are no signs of when the national carrier – Vietnam Airlines – would launch low-cost services.