BUDGET carrier AirAsia has ambitious plans to launch a low-cost Vietnamese airline for regional expansion.
AirAsia announced the local partnership with Vietnam’s Thien Minh Group to form a US$44 million joint venture in which AirAsia will hold a 30 percent stake.
According to Bernama, local Vietnamese paper Tien Phong (Pioneer) reported the venture aims to begin operations in 2018 with a focus on “domestic and international under-served routes”.
The move comes as Vietnam records a 28 percent passenger growth, triple the pace of other Southeast Asian nations and the fifth-biggest market in the region overall.
However, not everyone is optimistic about the airline’s penetration into the local Vietnamese market.
“The market is now well served by two low-cost carriers, VietJet and Jetstar Pacific. The rate of growth will likely slow in the coming years as the market is now more mature,” Brendan Sobie, Singapore-based chief analyst at CAPA Centre for Aviation, told Bloomberg.
In the past, AirAsia signed local partnerships with affiliates in Indonesia, Thailand, India and Japan, all which heavily bank on a low-cost, long-haul model for international travel through its AirAsia X offshoot.
The Bloomberg report said the carrier has ordered hundreds of planes worth billions of dollars from Airbus SE to meet future growth plans.