VietJet AirAsia budget airline in Vietnam

Friday, February 12, 2010, 19:43 by Jose Philip

AirAsia, VietJet Air set up low-cost airline VietJet AirAsia in Vietnam; flights to start in May 2010

AirAsia, low-cost airline headquartered in Malaysia, has bought a 30% take in VietJet Aviation (trading as VietJet Air) in order to set up a budget airline based in Vietnam.

Malaysia’s Ministry of Transport has approved the acquisition of shares of VietJet Aviation, AirAsia said in a statement.

However, AirAsia did not disclose the amount it paid to buy the 30% take in VietJet Aviation.

The new Vietnam-based low-cost carrier, called VietJet AirAsia, is scheduled to begin operation in May 2010. It will operate domestic as well as international flights. Details about the routes and frequencies are being finalised.

VietJet AirAsia was initially scheduled to begin operations in late 2008, but it was put off because of exorbitant prices of fuel and the worldwide economic recession.

Nguyen Duc Tam, director-general of VietJet Air, said the new airline had set a target of becoming the leading airline in Vietnam.

AirAsia, which pioneered budget travel in Asia, is also the biggest low-far airline in Asia, operating both domestic and international services.

With the setting up of VietJet AirAsia, Vietnam will be the fourth country where AirAsia has a base – after Malaysia, Indonesia and Thailand.

In a separate statement, VietJet Aviation said that the launching of VietJet AirAsia is bound to play a big role in the diversification of the passenger-aviation sector in Vietnam, and also will offer more options for the air travel needs of the people in Vietnam and in the region.

According to AirAsia, the new low-cost carrier will enable it expand its presence in Vietnam. The new venture also will be another gateway of AirAsia in South-east Asia – connecting with China, South Asia, North Asia as well as East Asia, including Japan, Taiwan and South Korea.

VietJet Aviation, or VietJet Air – the first privately owned airline in Vietnam – was launched in December 2007, with VND600 billion (US $37.5 million) as the initial investment capital. The main shareholders of VietJet Air were the T&C Group, the Sovico Group, and the Housing Development Joint Stock Commercial Vank (HD Bank). VietJet Air was the fourth airline in Vietnam, after Vietnam Airlines, Vietnam Air Service Company (VASCO), and Jetstar Pacific Airlines.

However, according to its website, Vietjet Air has not yet offered commercial flights.

Indochina Airlines, the second privately owned airline to be licensed in Vietnam, began flights in November 2008.

At present, Vietnam Airlines is the only airline based in Vietnam that operates international flights.