Vietnam Airlines to create new domestic airline by second quarter this year

Report contributed by : PK Chai
Edited by: Gan Yung Chyan
                  / KUCINTA SETIA
Distributed to All Press & Travel Professionals

Vietnam Airlines plans to split off a domestic-service unit to create a short-haul carrier as it loses ground to low-cost rival Vietjet Air. According to Pham Ngoc Minh, CEO of Vietnam Airlines, the new airline would be formed by restructuring Vietnam Air Services Company (VASCO) into a new airline joint venture whose services will be aimed at business travelers.

Vietnam Airlines will hold 51 percent of the venture while the other shareholder Techcombank will take up a 49 percent stake in the yet-to-be-named venture.

Techcombank will initially invest 147 billion dong ($6.6 million) in the venture, while Vietnam Airlines will provide the aircraft and other VASCO assets.

The new airline will operate five ATR short-range aircraft starting in the second quarter and generate total revenue of 2 trillion Dong in the next three years, the Saigon Times reported Monday, citing a proposal submitted to the transportation ministry.

The move comes amid CAPA's speculation that market-share gains of Vietjet Air will probably surpass Vietnam Airlines as the nation’s biggest domestic carrier this year although Vietnam Airlines owns 70 percent of low-cost Jetstar Pacific Airlines with Qantas Airways holding the remaining 30 percent. 

Vietnam is expected to rank among the world’s 10 fastest-growing aviation markets in the next two decades, according to the International Air Transport Association.