Vietnam Airlines Corp. has clinched a deal with Australia’s Qantas Group to turn the loss-making Jetstar Pacific Airlines into a strong carrier with domestic and international services.
The partnership was announced on Tuesday when Vietnam Airlines officially took over a 69.93% stake at Jetstar Pacific from State Capital Investment Corp. (SCIC) as approved by the Prime Minister in January this year. SCIC also signed an agreement on the same day in Hanoi to transfer the majority state stake that it had been holding at the Vietnamese low-cost carrier to Vietnam Airlines.
The transfer made Vietnam Airlines the largest shareholder of Jetstar Pacific, followed by Qantas Group with 27%. The corporation will sell a further 3% stake to Qantas to bring the ownership of this Australian group at Jetstar Pacific to 30% in line with a deal that SCIC and the foreign partner struck in Hanoi in April 2007.
Jetstar Pacific organized an extraordinary meeting for shareholders in Hanoi on Tuesday to pass a business development plan envisaged building this airline into a leading budget carrier in the country. According to this plan, Jetstar Pacific will focus on busy domestic and international air routes and will initially get A$25 million, including some A$7.5 million from Qantas to gradually develop an all-Airbus A320 fleet of 15 within the next few years.
Pham Ngoc Minh, chief executive officer of Vietnam Airlines, said in a statement released on Tuesday evening that shareholders of Jetstar Pacific approved the development plan based on the low-cost business model this airline had as well as financial capability and experience of Vietnam Airlines.
“The development plan is believed to breathe new life into Jetstar Pacific and bring more benefits to its passengers and help bolster development of Vietnam’s aviation market,” Minh said.
Bruce Buchanan, CEO of Jetstar Group under Qantas Group, said in the statement that Vietnam Airlines was welcomed as a new partner at Jetstar Pacific and expected that the partnership between the full-serviced Vietnam Airlines and the low-cost Jetstar Pacific would ride on the cooperation success of Qantas and Jetstar Airways in Australia.
Buchanan said the low-cost business model and great potential of Vietnam’s aviation market promised good opportunities for Jetstar and the cooperation with Vietnam Airlines helped translate these opportunities into reality.
Jetstar Pacific new uses five Boeing B737-400 and two Airbus A320 aircraft for more than 150 weekly flights from HCMC to Hanoi, Danang, Haiphong and Vinh among others. In May 2008, Pacific Airlines completed its transformation to operate under the no-frills airline Jetstar Pacific, using the Jetstar logo for its domestic business in line with a strategic and commercial partnership with Qantas’s airline Jetstar.
Vietnam Airlines currently has more than 300 daily flights to 20 domestic and 27 international destinations. The national flag air carrier has 75 planes of different types and plans to expand the fleet to 115 by 2015 and 170 by 2020.