AirAsia to set up low-cost carrier in Vietnam

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Malaysian low-cost carrier AirAsia is to set up an airline in Vietnam in partnership with state-owned shipbuilder Vinashin.

AirAsia on 31 August signed a letter of intent with Vinashin (Vietnam Shipbuilding Industry), "as a preliminary step towards exploring, assisting and creating a business co-operation between both parties regarding the establishment of a low-cost airline based on the AirAsia business model in Vietnam".

It says the new airline will be named Vina AirAsia and it will operate on domestic and international routes. It adds that the new airline "will eventually build two distinct divisions to facilitate short-haul aviation and long-haul aviation".

It says the new airline will be built on the "successful low-cost model pioneered by AirAsia in this region".

Vinashin, Vietnam's national shipbuilding group, will primarily be responsible for securing government approvals for the establishment of the new airline while AirAsia will procure aircraft, provide management expertise and set up the main airline infrastructure.

AirAsia expects to have a 30% stake in the new airline and says it will fly Boeing 737-300s. Nine are expected to be operated within two years of the start of operations, a target date for which is not being revealed.

AirAsia already has 49%-owned low-cost associate carriers in Indonesia and Thailand that fly both domestic and short-haul international services. The main Malaysian operation also operates domestic and short-haul services while a sister carrier is being established that will operate long-haul services.

There are two main airlines operating in Vietnam, both state controlled. National carrier Vietnam Airlines is a full-service operator while Pacific Airlines is a low-cost carrier that recently became 18%-owned by Australia's Qantas Airways.