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Southeast Asia Travel Boom, AirAsia Plans Joint Venture in Vietnam

Southeast Asia Travel Boom, AirAsia Plans Joint Venture in Vietnam

AirAsia, Asia's largest budget airline by fleet, plans to establish a low-cost carrier in Vietnam with local partners as it seeks to expand its regional foot print by tapping into one of the world's fastest-growing aviation markets.

The company is partnering Gumin Company, a firm controlled by Vietnamese businessman Tran Trong Kien, to form the joint venture, AirAsia said in a stock exchange filing. Under the pact, Gumin and Tran will together hold a 70% stake in the joint venture Hai Au Aviation with AirAsia owning the remainder 30%.

The joint venture will apply for a license to run air transportation business and seek other necessary permits from the Vietnamese authorities, and aims to begin operations by early 2018, AirAsia said.


AirAsia is the latest to join a clutch of foreign companies to invest and expand into one of the fastest-growing Southeast Asian economies that the World Bank predicts will grow by 6.3% this year. Passenger traffic in Vietnam, the region's fifth-largest aviation market, surged 28% to 52 million travellers last year.

Image: Joshuaongys
Image: Joshuaongys


Vietnam is the latest country to lure Fernandes, who is seeking to build a pan-Asian budget airline, as the 28 percent growth in passenger traffic was triple the pace in other Southeast Asian nations. The fifth-biggest market in the region has seen domestic traffic double since 2013, and the middle-class will comprise close to a quarter of its population by 2010, AirAsia said.

Shares of AirAsia climbed 1.3 percent to 3.14 ringgit in Kuala Lumpur. They have gained 37 percent this year.

AirAsia has over the years established affiliates in Indonesia, Thailand, India and Japan, and is betting on a low-cost, long-haul model for international travel through its AirAsia X unit. It has ordered hundreds of planes worth billions of dollars from Airbus SE to meet its growth ambitions, and is in the process of selling a plane-leasing unit to raise more cash.

Source : Asia Nikkei | Bloomberg


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