Tony’s Vietnam ambition seems to be happening

Fernandes-Tony (Custom).jpgAirAsia’s Tony Fernandes appears to have finally succeeded in his long-held ambition to make AirAsia the ASEAN carrier with operations in all the major southeast Asian markets.

Today AirAsia announced that it is buying 30% of Vietnamese start-up VietJet which will be positioned as a low-cost carrier and be branded VietJet AirAsia.

VietJet has been trying to launch for two years but kept delaying. AirAsia, meanwhile, tried in 2007 to establish an airline in Vietnam with state-owned shipbuilding company Vinashin but the deal floundered because the Vietnamese authorities refused to give the go-ahead.

But AirAsia says the country’s ministry of transport has approved its 30% acquisition of VietJet. It will be interesting to see how much they let AirAsia take market share from national carrier Vietnam Airlines. I’m sure Tony will be talking up how the new entrant will help grow the market rather than take share from the national carrier.

It’s also interesting that Tony is willing to settle for a minority stake. Generally speaking, AirAsia has strong control over its affiliates in Indonesia and Thailand. But with only 30% market share, it will be harder for AirAsia to exert control over the Vietnamese venture.

That said, the rewards can be tremendous. Vietnam is a market with a population of 70 million and there is so much demand for domestic flights that Vietnam airlines is operating Airbus A330s domestically.

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