The Civil Aviation
Administration of Vietnam (CAAV) has announced that from now Vietnam Airlines
will hold 70 per cent of stake in Jetstar Pacific Airlines, owned by the State
Capital Investment Corporation (SCIC).
With
this transfer, VNA will hold 90 per cent of the market share of the local
aviation market.
Jetstar
Pacific Airlines, a low-cost carrier, has reported huge losses for the past
several years, said CAAV.
The
airline losses were mainly caused by skyrocketing fuel prices and fluctuation
in the US dollar exchange rate, according to the report. Jetstar Pacific
Company’s revenue is 100 per cent in Vietnamese dong, while more than 80 per
cent of its expenditure in US dollars.
Jetstar
Pacific was developed from Pacific Airlines in 2004, founded by Saigon Tourist
Company and owned by VNA with 86 per cent stake. After VNA capital in Pacific
Airlines was transferred to SCIC, Pacific Airlines chose the low-cost airline
model and became a rival of VNA in the domestic aviation market.
The
turning-point for Pacific Airlines came in 2007, when Australia’s Qantas
aviation group acquired 27 per cent stake in the local carrier, changing its
name to Jetstar Pacific. The remaining majority stake in Jetstar Pacific was
held by SCIC and Saigon Tourist.
Currently,
besides VNA and JPA, the local aviation market has two other smaller carriers
namely Air Mekong with four aircrafts and VietJet Air with three airplanes,
that will start flights in December.
So
far, VNA still holds about 80 per cent of the local market share, JPA with over
17 per cent and the very small remaining market share belonging to
newly-established carriers. Both Air Mekong and VietJet Air are newly-established
carriers operating at a very small scale.
Leaders of both the carriers have expressed concern over VNA's move and dominance of the local market. A manager from Air Mekong said that VNA's dominance will lead to a market share of up to 90 per cent. Competition will therefore decrease and monopoly will increase.
Leaders of both the carriers have expressed concern over VNA's move and dominance of the local market. A manager from Air Mekong said that VNA's dominance will lead to a market share of up to 90 per cent. Competition will therefore decrease and monopoly will increase.
In
related news, according to the Civil Aviation Administration of Vietnam (CAAV),
Indochina Airlines has officially withdrawn its license because of continued
losses.
SGGP
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