AirAsia will soon have “the final piece of the puzzle” to complete its ASEAN connectivity when the AirAsia Vietnam JV starts operations, reportedly in the second half of 2019
Having set up affiliates in Thailand, Indonesia and the Philippines in addition to its home base of Malaysia, Vietnam is the missing link for the airline, Asia’s largest low cost carrier.
“AirAsia is an ASEAN airline. And in ASEAN, Vietnam is one of the last remaining countries with a large population we’re not in,” is how AirAsia Group CEO Tony Fernandes so succinctly put it.
He is filling the gap with the inking of a Memorandum of Cooperation with Vietnamese partners in Hanoi on December 6, reaffirming the airline group’s intention to set up a low cost carrier in the country.
The memorandum was signed by AirAsia with Vietnamese businessman Tran Trong Kien, in his capacity as CEO of Thien Minh Travel Joint Stock Company (TMG) and general director of Hai Au Aviation Joint Stock Company (HAA) that offers commercial seaplane services.
“Today’s memorandum reaffirms our commitment to making AirAsia in Vietnam happen. Last year when we announced this JV we were bullish about Vietnam, and we remain incredibly bullish about serving one of the most dynamic, fastest-growing economies in Asia,” added Fernandes.
He pointed out the LCC is already the largest foreign airline group in Vietnam by capacity, operating to five destinations in the country, including the most recent addition, Phu Quoc.
“We will continue to expand our network to connect Vietnam to ASEAN and beyond, something our local JV will be able to accelerate.”
AirAsia is an ASEAN airline. And in ASEAN, Vietnam is one of the last remaining countries with a large population we’re not in. – Tony Fernandes
Tran said Vietnam needs better connectivity to meet the country’s rising travel demand, which saw the number of international arrivals doubled over the last three years. Domestic and outbound travel have also grown tremendously.
According to statistics from Vietnam National Administration of Tourism, total international arrivals in 2017 reached 12.92 million, an increase of 29.1% over the same period last year. For the first 11 months of 2018 the country saw 14.12 million tourist arrivals, a rise of 21.3% over the same period last year.
“Adding a new airline especially at this stage and with an experienced operator like AirAsia, is a much needed and welcomed move. This new airline will bring more and better choices to our people in the years to come,” added Tran.
(Image credit: lena_serditova/Getty Images)
The partners did not disclose details of the JV such as its name or the shares each party will hold. According to a Bloomberg report, “the airline plans to deploy five or six Airbus SE A320 and A321 aircraft on domestic routes between Hanoi, Da Nang and other cities as well as for regional flights, and the fleet could expand to as many as 30 within three years.”
The deal inked in March last year was between AirAsia’s wholly-owned subsidiary, AirAsia Investment Ltd (AAIL), and Gumin Co Ltd, Hai Au Aviation Joint Stock Company (HAA) and Tran Trong Kien. Under this shareholder and a share subscription agreement, AAIL was to hold a 30% stake or 30 million shares, Gumin 69.9% (69.99 million shares) and Tran one share.
AirAsia said then the JV would require investments of one trillion Vietnamese dong (US$44 million), and was initially to start flying early this year.
AirAsia currently operates 141 return flights weekly on 13 routes connecting Hanoi, Ho Chi Minh City, DaNang, Nha Trang and Phu Quoc with Kuala Lumpur, Penang and Johor Bharu in Malaysia; Bangkok and Chiang Mai in Thailand; and Manila in the Philippines. It has carried 12 million passengers to and from Vietnam since entering the market in 2005.
• Featured image credit: AirAsia
