AirAsia gives up the game in Vietnam

After three failed ventures to enter the Vietnamese aviation market, AirAsia boss Tony Fernandes recently revealed that he will plot expansion in Cambodia, Myanmar and China.    
November 27, 2019 | 09:02
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Three times Tony Fernandes tried to bring AirAsia into the Vietnamese aviation market, all three times the CEO of Asia's largest low-cost airline group received a 'bitter fruit'.

In 2005, AirAsia determined to enter Vietnam when it wanted to become a strategic shareholder of Pacific Airlines - a state-owned airline which changed its owner many times because of inefficient operation. AirAsia lost the race to Australia's Qantas. Pacific Airlines then officially changed its name to Jetstar Pacific.

In 2007, AirAsia made its second attempt with partner, Vietnam Shipbuilding Industry Group (Vinashin). AirAsia contributes 30% capital and in charge of operating the flights, Vinashin takes care of the licensing procedures. The project was unsuccessful because Vietnam did not advocate the establishment of new airlines, especially foreign-owned firms.

airasia gives up the game in vietnam
A “failed” shakehand between AirAsia and Thien Minh Group in establishing new airline in Vietnam

In 2010, the third opportunity came again when AirAsia approached VietJet Air to buy a 30% stake and became a strategic partner in the joint venture airline VietJet AirAsia. But the project once again failed due to the opposition of Vietnam Airlines.

Not abandoning the dream of flying in the sky of Vietnam, at the end of December 2018, AirAsia and Thien Minh Group inked a joint venture contract worth about US$ 44 million to set up a new airline, of which AirAsia holds 30%.

In April 2019, AirAsia said that it has terminated its cooperation with Thien Minh Group.

Regarding the plan to enter new markets in Southeast Asia, the owner of AirAsia said he was interested in the markets of Cambodia, China and Myanmar. In particular, Tony Fernandes is looking for partners in the Cambodian market.

That is because the country's policy is quite open when it is not restricting foreign investors to pour capital into the local aviation market. However, new companies must have invested US $ 30 million in the first three years, that amount does not include aircraft.

In addition to the capital, Phnom Penh, Cambodia's Siem Reap International Airport is one of the busiest airports in Southeast Asia. The airport welcomed 4.5 million passengers last year thanks to the attraction of the nearby Angkor Wat temple, the world's largest religious monument.

In the long run, Mr. Fernandes said AirAsia also wants to set up an airline in China. This is an important market for AirAsia, as nearly 20% of its annual sales come from routes to China. "We will definitely fit this huge market," AirAsia CEO affirmed.

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