AirAsia drops plan for joint-venture in Vietnam

Airasia Drops Plan To Take Off In Vietnam

AirAsia’s meanwhile third attempt to set up a low-cost carrier in Vietnam has fallen through as the airline on April 17 announced it terminated a joint venture with local partners.

“The company wishes to announce that its wholly-owned subsidiary AirAsia Investment Limited, together with Gumin Company Limited and Hai Au Aviation Joint Stock Company, have amicably agreed to terminate and release each other from all obligations under the transaction agreements in relation to the proposed joint venture in Vietnam, effective 17 April 2019,” a filing with Bursa Malaysia read.

AirAsia and Gumin originally announced in March 2017 that they would initially capitalise a low-cost airline joint-venture in Vietnam with $47 million with the aim to offer an “affordable but high-quality airline service to Vietnamese and foreign tourists” and reiterated this plan in December 2018. Plans were for the venture to start services in Vietnam by August 2019.

While AirAsia gave no reasons why it shelved the plan for the joint-venture, it is likely related to lobbying by Vietnam’s national carrier against new competition. In fact, it is the third failure AirAsia’s to start an airline in Vietnam.

In September 2007, AirAsia signed a letter of intent with Vietnam Shipbuilding Industry Corp to set up a Hanoi-based airline, but in 2008 the regulator abruptly decided not to award new operator licenses. Vietnam Airlines was bitterly opposed to the new airline.

In 2010, AirAsia tried again with a plan to buy 30 per cent of start-up VietJet, but again Vietnam Airlines opposed AirAsia’s entry. It was even hostile to the proposed name of the new carrier, VietJet AirAsia.

In 2011, AirAsia dropped out of the venture citing several issues. One it specifically mentioned was the Vietnam authorities’ unwillingness to allow use of the AirAsia name in Vietnam. Eventually, VietJet Air took off without AirAsia.

However, AirAsia Group CEO Tony Fernandes says he was optimistic of the low-cost carrier making “another entry into the Vietnam market” by end of this year.

“Vietnam is very much in the plan. I am still optimistic of AirAsia being in Vietnam by the end of the year. Watch this space. Picking the right one,” Fernandes said on his Twitter account.

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AirAsia’s meanwhile third attempt to set up a low-cost carrier in Vietnam has fallen through as the airline on April 17 announced it terminated a joint venture with local partners. “The company wishes to announce that its wholly-owned subsidiary AirAsia Investment Limited, together with Gumin Company Limited and Hai Au Aviation Joint Stock Company, have amicably agreed to terminate and release each other from all obligations under the transaction agreements in relation to the proposed joint venture in Vietnam, effective 17 April 2019,” a filing with Bursa Malaysia read. AirAsia and Gumin originally announced in March 2017 that they would...

Airasia Drops Plan To Take Off In Vietnam

AirAsia’s meanwhile third attempt to set up a low-cost carrier in Vietnam has fallen through as the airline on April 17 announced it terminated a joint venture with local partners.

“The company wishes to announce that its wholly-owned subsidiary AirAsia Investment Limited, together with Gumin Company Limited and Hai Au Aviation Joint Stock Company, have amicably agreed to terminate and release each other from all obligations under the transaction agreements in relation to the proposed joint venture in Vietnam, effective 17 April 2019,” a filing with Bursa Malaysia read.

AirAsia and Gumin originally announced in March 2017 that they would initially capitalise a low-cost airline joint-venture in Vietnam with $47 million with the aim to offer an “affordable but high-quality airline service to Vietnamese and foreign tourists” and reiterated this plan in December 2018. Plans were for the venture to start services in Vietnam by August 2019.

While AirAsia gave no reasons why it shelved the plan for the joint-venture, it is likely related to lobbying by Vietnam’s national carrier against new competition. In fact, it is the third failure AirAsia’s to start an airline in Vietnam.

In September 2007, AirAsia signed a letter of intent with Vietnam Shipbuilding Industry Corp to set up a Hanoi-based airline, but in 2008 the regulator abruptly decided not to award new operator licenses. Vietnam Airlines was bitterly opposed to the new airline.

In 2010, AirAsia tried again with a plan to buy 30 per cent of start-up VietJet, but again Vietnam Airlines opposed AirAsia’s entry. It was even hostile to the proposed name of the new carrier, VietJet AirAsia.

In 2011, AirAsia dropped out of the venture citing several issues. One it specifically mentioned was the Vietnam authorities’ unwillingness to allow use of the AirAsia name in Vietnam. Eventually, VietJet Air took off without AirAsia.

However, AirAsia Group CEO Tony Fernandes says he was optimistic of the low-cost carrier making “another entry into the Vietnam market” by end of this year.

“Vietnam is very much in the plan. I am still optimistic of AirAsia being in Vietnam by the end of the year. Watch this space. Picking the right one,” Fernandes said on his Twitter account.

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