Jetstar takes off ahead of ASEAN's Open Sky

As low-cost airlines are forecast to dominate the regional aviation market under the ASEAN Open Sky policy, national flag carrier Vietnam Airlines and its partner, Australia’s Qantas, have injected an additional $139 million into low-cost carrier Jetstar Pacific Airlines to develop its aircraft fleet and take advantage of the market’s potential.Le Hong Ha, general director of Jetstar Pacific Airlines (JPA), confirmed at a meeting last week that Qantas, which owns a 30 per cent stake in JPA, would invest $100 million, while Vietnam Airlines (VNA), which holds a majority 70 per cent share in the airline, would contribute the rest. The extra investment would help JPA develop its aircraft fleet to 30 units by 2020, thus helping the carrier continue its development in the low-cost segment over the next five years.“By investing in low-cost air services, VNA and other airlines aim to cash in on a significant increase in the number of Vietnamese people travelling abroad using low-cost carriers, and especially to benefit from the ASEAN Open Sky Agreement,” Vo Huy Cuong, deputy head of the Civil Aviation Administration of Vietnam (CAAV), told VIR.The agreement, also known as the ASEAN Single Aviation Market, will allow air services to freely operate routes within the ASEAN region without facing any government restrictions. The same advantages apply to Vietnamese airlines.The ASEAN region, which is home to more than 600 million people, has seen a boom in low-cost carriers in recent years, heightening competition in the air transportation segment. Singapore, China, India, and Thailand have seen the most rapid development of such services.To prepare for the liberalisation of regional aviation, aside from its additional investment in JPA, VNA has thus far upgraded the overall quality of its services on the ground and in the air from three to four stars, in accordance with international standards. It has also invested in a modern fleet, as the carrier is expected to replace its entire wide-body fleet with 33 planes, including 19 Boeing 787 Dreamliner aircraft and 14 Airbus A350-900XWB aircraft (both purchase and lease) over the next three years.In a similar move, VietJetAir, the country’s only privately run air carrier, has taken steps to prepare its personnel, air fleet management, and financial capacity to cash in on the benefits of the ASEAN Open Sky agreement.Aside from a contract with Airbus to lease and purchase 100 aircraft, VietJetAir has ordered six new Airbus A321 planes, bringing the number of its fleet to over 107. It has also implemented a series of co-operation activities with leading global manufacturers and suppliers of aviation materials and services.VietJetAir is considered as a major success in aviation. Its effective development has catapulted it onto the list of the sector’s key players, and it is expected to soon become a regional leader.By Bich Thuy(c) 2016 Vietnam Investment Review Provided by SyndiGate Media Inc. (, source Middle East & North African Newspapers