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Malaysian budget airline AirAsia Berhad plans to start a low-cost carrier in Vietnam in a joint venture with local businesses to tap the country’s booming travel market, company representatives told Viet Nam News in Hanoi.
AirAsia
signed a shareholders’ agreement with Vietnam’s Gumin Co Limited, Hải
Âu Aviation Joint Stock Company and Trần Trọng Kiên, the owner of these
two companies, to form the joint venture last Friday, which was
announced by the airline to Malaysia’s stock exchange.
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The
carrier, expected to start flying at the beginning of 2018, will need an
investment of 1 trillion dong (US$44 million), with AirAsia holding 30
per cent and Gumin 70 per cent.
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Vietnam is the latest country to
lure Malaysian billionaire Tony Fernandes, the head of AirAsia, who is
aspiring to build a low-cost airline network covering Asia, as the
28-per-cent growth in Vietnam’s aviation market is three times the rate
in other Southeast Asian countries.
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Vietnam is also the fifth biggest aviation market in the region,
after Indonesia, Thailand, Malaysia and Singapore, with a passenger
volume that has doubled since 2013 thanks to a growing middle class
population that accounted for 25 per cent of the total population by
2010.
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In recent years, AirAsia has established affiliates in
Indonesia, Thailand, India and Japan. The airline is betting on low-cost
airline models for international travel through its AirAsia X
subsidiary. Fernandes has also ordered hundreds of Airbus aircraft worth
billions of dollars to meet his ambitious growth plans, and he is in
the process of selling a subsidiary specialising in leasing aircrafts to
raise cash.
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However, Brendan Sobie, an analyst at CAPA Centre
for Aviation, told Bloomberg that AirAsia would face huge challenges,
because it was late in entering the Vietnamese market. “The market is
currently well served by two carriers, VietJet Air and Jetstar Pacific.
The growth rate will slow down in the coming years, as the low-cost
market is now more mature.”
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The value of Vietjet Aviation Joint Stock Company shares has grown
52 per cent since its listing on HCM Stock Exchange in February 28.
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According to a report released by ACB Securities in December last year,
passenger traffic in Vietnam will continue to grow at double-digit
rates over the next decade, after an annual growth of 17 per cent in the
last decade.
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Source - TheNation
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