Tony Fernandes the flamboyant boss of budget airline AirAsia has announced that he is to join forces with Gumin Co., Hai Au Aviation Joint Stock Co. and businessman Tran Trong Kien. This will result in a new Vietnam airline offering budget fares early in 2018. Fernandes’ AirAsia takes a minor share with the Gumin company around 70%. This is yet more good news for travellers in the region, coming soon after Vietjet’s recently announced cheap flights to Australia and Lion Air’s amazing Tet deals.
The price war has been heating up in recent months. AirAsia themselves launched a $99.00 flight to Australia which caused a major stir. Fernandez has not hidden his desire to build a pan-Asian airline business. Vietnam has seen a 28% growth in passenger numbers in recent years, triple that of the other Southeast Asian countries. The country currently lies in fifth place for passenger traffic with figures showing a doubling of airline traffic since 2013. Vietnam has the region’s fastest growing economy and the middle-class now make up a quarter of the population.
News of a brand new Vietnam Airline is sure to cause more than a ripple in an already heated up market. Prices have been falling in recent months and look set to continue so to do. AirAsia, with it affiliates in Thailand, Japan and India, is gambling on a low-cost business model for long haul flights. Orders of billions of dollars for hundreds of aircraft are in place with Airbus SE.
New Vietnam Airline for a very healthy market
Growth projections look excellent, with annual figures of 17% growth forecast for the next decade. Vietjet, courted publicity with ads featuring its scantily clad flight attendants, was listed on the stock exchange in March and has seen a huge 52% jump in value, since.
There has never been a better time for cheap travel in Southeast Asia. A new Vietnam Airline will make it even better. However, it may not last forever, with Brendan Sobie, the Singapore-based chief analyst at CAPA Centre for Aviation, stating, “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.”
