Vietnam Government responded to Vietnam Airlines' requests for the government not to endorse AirAsia’s plans to launch a JV airline in the country, stating all civil aviation cooperation with foreign partners requires approval from the Prime Minister (VietNamNet, 17-Mar-201). Vietnam Airlines claimed the JV would allow AirAsia to join VietJet AirAsia’s Board of Directors, allowing it to manage the carrier. The carrier also stated the entry of a number of foreign LCCs would adversely affect new local carriers. Civil Aviation Administration of Vietnam (CAAV) has stated that AirAsia only has a share in VietJet AirAsia, and that there are no plans between VietJet AirAsia and AirAsia to launch a new carrier. VietJet Air confirmed the CAAV’s comments.
Vietnam Government supports AirAsia:only has VietJet AirAsia stake, will not operate the carrier
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AirAsia initiates third attempt to launch Vietnamese JV; Vietnam maybe overburdened with LCCs
The AirAsia Group has forged a new joint venture in Vietnam, marking its third attempt to establish a Vietnamese affiliate. AirAsia was initially partnered with VietJet Air but the partnership was dissolved prior to VietJet commencing operations in late 2011.
The market has since more than doubled in size, and Vietnam has emerged as Southeast Asia’s fastest growing market. While there is further growth potential, the LCC incumbents VietJet and Jetstar Pacific have first mover advantage, and infrastructure constraints could make it difficult for any new entrant to establish a significant presence. AirAsia will also need to overcome regulatory hurdles.
Vietnam is the second largest market in Southeast Asia without an AirAsia affiliate - after Singapore, where the group has been able to develop a sizeable presence with a virtual hub. Vietnam is a market AirAsia strategically cannot avoid, but the group is late to the party and faces some of the same obstacles that have impacted its performance in the Philippines.
Southeast Asia aviation outlook: passenger growth accelerates, led by Vietnam, Myanmar and Malaysia
Southeast Asia’s aviation market recorded healthy growth in 2016, with passenger traffic expanding faster than the global average across nearly every country in the region. Six of Southeast Asia’s 10 countries had growth in or near the double digits, led by Vietnam and Myanmar. Seven countries had growth equal to, or higher than, in 2015.
Southeast Asia should continue to experience rapid growth in 2017 and beyond. Vietnam and Myanmar will likely again lead the pack in 2017, joined by Malaysia. The Philippines should experience growth of approximately 10% for the third consecutive year, also putting it towards the top of the pack.
However, overcapacity remains a long term concern, pressuring yields and profitability. The average profit margin of the Southeast Asian airline sector significantly lagged the global average in 2016, and this trend will likely continue in 2017.