AirAsia causes concern for Vietnam Airlines

AirAsia’s plan for a joint venture with a local Vietnam carrier has jolted a nervous Vietnam Airlines into action, urging the government this week to stop the move.

Last month, the Malaysian budget carrier purchased a 30 percent stake in Vietnam’s local VietJet Air. The carriers announced soon after joint venture plans for a new budget airline which was approved by the Ministry of Transport.
According to Thanh Nien Daily, VietJetAirAsia will operate both international and domestic flights starting May.

However, in a letter to Prime Minister Nguyen Tan Dung, Vietnam Airlines asked the government to prevent the venture from materialising.

The carrier said AirAsia’s stake in VietJet was only a ploy to enter the domestic market.

Vietnam Airlines said foreign carriers such as AirAsia and Jetstar were taking advantage of the government’s 30 percent cap on foreign ownership in a local airline.

It said the trend of foreign airlines coming into the country to purchase stakes in local carriers was bound to harm the local industry.

If the venture goes ahead, Vietjet AirAsia will compete directly with Jetstar Pacific, who has not raised any objection to the planned venture. Source ETB

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