Tourism Indochina: AirAsia Tries to Pursue Venture with Vinashin

AirAsia Berhad (MYX: 5099) is a Malaysian-based low-cost airline. AirAsia is Asia's largest low-fare, no-frills airline and a pioneer of low-cost travel in Asia. AirAsia group operates scheduled domestic and international flights to over 400 destinations spanning 25 countries. Its main hub is the Low-Cost Carrier Terminal (LCCT) at Kuala Lumpur International Airport (KLIA). Its affiliate airlines Thai AirAsia and Indonesia AirAsia have hubs in Suvarnabhumi Airport and Soekarno-Hatta International Airport respectively. AirAsia's registered office is in Petaling Jaya, Selangor while its head office is located in Kuala Lumpur International Airport. Air Asia plans to open ASEAN regional headquarters in Jakarta by August or September 2011. The airline itself will maintain its headquarters in Kuala Lumpur for the time being.

Vinashin is a state-owned shipbuilding firm in Vietnam. Vinashin was one of Vietnam's leading industrial concerns, and entered into a partnership with Damen, Kongsberg, and Hyundai. Vinashin was heavily indebted, and executives have been arrested for mismanagement. but it has been claimed that further restructuring would allow debts to be repaid within a year. Vinashin folded under a debt burden of $4.5 billion in 2010;as of March 2011, it was being restructured.\

Tourism Indochina: AirAsia Tries to Pursue Venture with Vinashin

(Tourism Indochina:Date : 2007-10-28):

The Government Office issued a statement on October 16 rejecting Vinashin's proposal for expansion to the air transport market, which was submitted following the signing in Malaysia on August 31 of a letter of intent with AirAsia.

Prime Minister Nguyen Tan Dung witnessed the signing ceremony while he was in Malaysia. An AirAsia executive, who asked not to be named, told the Daily on Wednesday that the Malaysian airline was pursuing the plan to make VinaAirAsia Vietnam's second budget carrier after Pacific Airlines. AirAsia will give Vinashin full support to go ahead with the establishment of VinaAirAsia with some US$30mil in registered capital, the executive said. The planned airline will be 30% owned by AirAsia. Late last month, Chin Nyok San, head of business development at AirAsia, told the Daily that preparation was underway and that VinaAirAsia could begin service in six months' time. However, the Government has not approved the shipbuilder's proposal to expand its operations to civil aviation, meaning that the joint venture has virtually come to a dead end. The Government's refusal of Vinashin's proposal came as domestic carriers, especially Pacific, have expressed concern that VinaAirAsia could fuel a competition which they do not want. Pacific holds only 15% of Vietnam's aviation market and the rest by Vietnam Airlines and Vietnam Air Services Co. (VASCO), also under the umbrella of the national flag air carrier. Airlines and travel agencies have estimated that six million Vietnamese travel by air in Vietnam a year, and the demand would jump 20-30% this year. Civil aviation service is a conditional business though Vietnam's law allows foreign investors to own up to 49% of a joint-stock air carrier. Qantas Airways is a good example as this Australian group earlier this year acquired a 30% stake worth US$50mil in Pacific. Qantas CEO Geoff Dixon said the Australian group needed more time to restructure Pacific during his visit to Vietnam earlier this month, and this might be seen as one of the reasons for Pacific to oppose the VinaAirAsia plan. Pacific CEO Luong Hoai Nam told the Daily on Wednesday that Pacific had expressed outcry over Vinashin's planned venture with AirAsia, which earlier intended to invest in Pacific but no deal was struck. Nam explained 30% of the capital AirAsia planned for Pacific comprised tangible and intangible parts while it was difficult to evaluate the intangible assets. If the intangible assets were not included, the AirAsia investment planned to pay for Pacific's stake was much lower the offer by other investors, including Qantas. Local media quoted Lai Xuan Thanh, deputy head of the Civil Aviation Administration of Vietnam (CAAV), as saying that the authority had not received an application for VinaAirAsia. However, he noted Vietnam would license two or three airlines between now and 2010, with priority given to new locally-owned airlines rather than foreign-invested ones. The AirAsia executive said AirAsia and Vinashin had not officially proposed setting up VinaAirAsia. AirAsia operates the daily flights from Thailand's Bangkok and Malaysia's Kuala Lumpur to Hanoi and vice versa, with average seat occupancy of 80% for this year.

AirAsia has increased the number of its daily flights to and from Vietnam to 10 although it entered this market only in October 2005. It plans to launch services to HCMC some time this year. (Source: SGT)

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