Scarcely a month after entering a low cost carrier alliance with Air Asia, Jetstar’s battered Vietnam ambitions now face competition from a joint venture in the form of Vietjet Air Asia.

KUALA LUMPUR, 10 FEBRUARY 2010 – AirAsia is proud to announce its acquisition of a 30% equity stake in Vietjet Aviation Joint Stock Company (Vietjet Air) to establish a Vietnam-based joint venture low-cost airline which will carry the name Vietjet AirAsia.

The Ministry of Transportation of Vietnam approved the share acquisition on February 9 (Tuesday).

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Vietjet AirAsia will be operating both domestic and international flights. It is currently finalizing details regarding routes, frequencies and launch of flights.

The formation of Vietjet AirAsia makes Vietnam AirAsia’s fourth country base, following Malaysia, Thailand and Indonesia.

AirAsia, Asia’s leading and largest low-cost airline, joined the venture to expand its reach in Vietnam and open the country as another gateway in the ASEAN region. The joint venture strengthens AirAsia’s position as THE ASEAN airline, expanding operations in the region, increasing intra-regional connectivity, and championing the ASEAN region as a tourism hub.

“The birth of Vietjet AirAsia contributes to the diversification of the aviation market in Vietnam, providing more options to meet the air travel needs of people in Vietnam and in the region,” Vietjet said.

Vietjet AirAsia will be tapping the expertise of both AirAsia and Vietjet Air for the successful operation and marketing of low-cost flights.

“The joint venture is a well-balanced combination of the management system, technical expertise, long-term experience in the airline industry, crew and international brand of AirAsia, and the financial strength, as well as Vietnamese market insights of VietJet Air,” Vietjet Air added.

Several things stand out in this.

Vietjet which was formed in 2007 as an entirely privately owned enterprise in a country where the communist state owned all or most of all of the other Vietnam based carriers, and was struggling to get its initial fleet of two A320s into service, with the most recent published target date being May this year.

Air Asia appears to have solved many of Vietjet’s start up problems by giving it a stronger joint branding, traffic feed, and expertise in A320 operations.

The Vietnamese government, which already owns 70% of Jetstar Asia through a state investment corporation, has told Qantas, which owns 27% of the venture, that it has to stop using its generic Jetstar branding on its investment this October, and has denied two Australian executives that Qantas appointed to the airline permission to leave the country since before Christmas, while it investigates foreign exchange hedging losses of $34 million.

The future of Jetstar Pacific, even as an alternatively branded investment for Qantas, was under severe pressure before Air Asia seized the opportunity Vietjet provided.

This development is as sharp a reminder as any that the alliance between Air Asia and Qantas (through its Jetstar franchises) is no guarantee that the larger and more successful partner, Air Asia, will not let Jetstar get between it and the proverbial dropped gold coin on a footpath.

Tony Davis, the Tiger Airways CEO said:

“We think this is hilarious. Since Qantas and Air Asia announced their so called “alliance,” Jetstar has spent over three billion dollars on a completely different engine to Air Asia for their fleet of A320s and now Air Asia is taking on Jetstar Pacific in Vietnam.
“As we said at the time, Tiger Airways does not see the value in these so called alliances and believes that recent actions have more than validated the views of many that this marriage of convenience between Qantas and Air Asia was doomed from the start.”

Last month we used this Peter Rickett’s photo of (from left) the CEO’s of Air Asia, Qantas and Jetstar, Tony Fernandes, Alan Joyce and Bruce Buchanan, at the announcement of the Air Asia-Jetstar alliance.

The new caption should read, So who is still laughing now?


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Peter Fray
Peter Fray
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