VietJet envisions regional low-cost empire

Keen on JVs in Laos, Myanmar, Cambodia

Following on the heels of its first subsidiary airline in Thailand, Vietnam's low-cost carrier VietJet Air is in talks to create similar joint-venture carriers in Myanmar, Cambodia and Laos.

VietJet Air managing director Luu Duc Khanh (seated left) and Kan Air president Somphong Sooksanguan (seated right) sign a memorandum of understanding establishing Thai VietJet Air in a ceremony witnessed by Vietnamese Deputy Prime Minister Nguyen Xuan Phuc (standing third from left) along with Thai and Vietnamese dignitaries at Plaza Athe´ne´e Bangkok yesterday. PATIPAT JANTHONG

Forming subsidiary airlines in neighbouring countries is a key strategic tool for the airline, which only took to the skies in December 2011, to capture the region's fast-growing budget air travel market.

"We are discussing the joint venture possibilities in Myanmar, Cambodia and Laos, using Thai VietJet Air's 49:51 model," VietJet Air managing director Luu Duc Khanh told Bangkok Post yesterday.

At the same time, the airline is eyeing opportunities to create sister airlines in China, Indonesia and Malaysia.

VietJet Air clinched a memorandum of understanding yesterday with Thai commuter airline Kan Air to set up Thai VietJet Air in a high-profile ceremony held in Bangkok.

A Myanmar offshoot is expected to be the second subsidiary to get off the ground after the Thai unit, whose flights are scheduled to start late this year or early next year, said Mr Khanh.

He declined to name potential joint-venture partners in targetted countries, but noted the airline would be able to boost the size of its all-Airbus 320 fleet from eight to 20 next year to accommodate subsidiary carriers.

The right to operate domestic flights is not given to foreign airlines, reserved for locally registered airlines that are either locally owned or have limited foreign ownership.

The Asean Economic Community's Asean Open Sky scheme, which opens up air routes in all Asean countries, is expected to spur air travel demand in the region, with budget airlines seen as key beneficiaries.

Funding is not an issue at VietJet Air as it is backed by Sovico, a major diversified Vietnamese conglomerate with interests ranging from banking to manufacturing to aviation.

Kan Air president Somphong Sooksanguan said Thai VietJet Air, in which his Kannithi group owns 51%, would start serving major cities like Chiang Mai, Phuket and Hat Yai from its base in Bangkok's Suvarnabhumi airport with the deployment of two to three A320 single-aisle jets.

Myanmar is likely Thai VietJet Air's first possible overseas port of call as it aims to operate charter flights between Thailand and China, a sector that has seen explosive growth due to a skyrocketing Chinese tourists.

VietJet Air now serves 11 cities in Vietnam and operates two routes linking Bangkok and Ho Chi Minh City.

The airline targets service routes to Singapore, Taiwan, South Korea and "many more destinations", said Desmond Lin, business development director at VietJet Air.

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Writer: Boonsong Kositchotethana
Position: Deputy Editor Business