VietJet boldly starts to build pan-Asia low-cost portfolio, starting with new JV in Thailand

Vietnam's VietJet Air has started to pursue a pan-Asia LCC group strategy, initially establishing a joint venture affiliate in Thailand. If successful, VietJet could climb up the rankings in the dynamic Southeast Asian LCC market, where it now accounts for a tiny 2% of capacity. But the risks are high as the Southeast Asian LCC market is already highly competitive, with 22 carriers and several more in the works.

The planned launch of Thai VietJet and the pursuit of joint ventures in other ASEAN countries represent an ambitious move given that VietJet is only 18 months old. VietJet has quickly established itself in Vietnam but its brand is an unknown in other parts of Asia, which will make it a challenge to overcome the first mover advantages of AirAsia, Jetstar, Lion and Tiger.

In its first venture, in Thailand, VietJet will face stiff competition from two well-established LCCs, Thai AirAsia and Thai Airways affiliate Nok Air. Lion also plans to launch a joint venture in Thailand, a market which is growing but is unlikely able to support so many LCCs.