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Vietnamese start-ups: AirAsia cancels JV while Vietravel works towards launch
April 18th 2019
Tony Fernandes open to a Vietnamese JV with a new partner. Read More »
Vietnam’s start-up scene continues to be dynamic as tour operator Vietravel has applied for a license while the AirAsia group has cancelled its plan JV.
Tour operator Vietravel wants to expand its portfolio and plans to launch Vietravel Airlines in Thua Thien. The application will need regional approval and then central government sign-off.
There are concerns of over-crowding with large aircraft backlogs from VietJet and Bamboo Airways compounding already congested airports. It is unclear how much central influence is held by Hue Province, where Thua Thien is located. Start-ups in China and Korea have affiliated themselves with regional governments to boost their chances of approval from central authorities that might otherwise reject more airlines.
Vietravel says it has organised approximately 300 charter flights a year for each of the last two years. These flights have been in the domestic and international market. There is the usual concern that it is a leap from organising charters to running a scheduled airline. The charters average to less than one a day while a scheduled airline would eventually mount dozens of flights and deal with a far wider range of industry partners. The growing competition makes it harder for a tour organiser to branch out to an airline compared to Asia’s most famous example, Spring Airlines evolving from a travel agency.
Malaysia’s AirAsia Group said it has ended a March 2017 agreement to establish AirAsia Vietnam with local partners Gumin Company Ltd and Hai Au Aviation. The airline planned to fly by August this year. Last December AirAsia and its local partners signed a "reaffirming" memorandum of cooperation to establish AirAsia Vietnam.
It is the second affiliate AirAsia has called off this year, having ended plans to launch AirAsia China in Zhengzhou.
While AirAsia said it had long-term aspirations for a local unit in China, its future plans for Vietnam are more near-term. AirAsia said it would seek a new partner to launch in Vietnam still this year.
In a typically upbeat tweet, Tony Fernandes wrote: “Vietnam is very much in the plan. I am still optimistic of airasia being in Vietnam by end of the year. Watch this space. Picking the right one”. His last comment appeared to be in reference to a local partner.
A stock exchange disclosure announced the ending of the JV said: "The Company nonetheless remains interested in operating a low-cost airline in Vietnam due to its favourable geographical location, expanding aviation market and overall growth potential." The disclosure did not mention the search for a new partner.
