AirAsia's plan to launch Vietnam carrier fails to take off

[SINGAPORE] Malaysia's AirAsia Group Bhd has cancelled plans to enter Vietnam's crowded aviation market, but said it was still keen on operating a low-cost carrier in the country.

The Malaysian budget airline, in a statement on Wednesday, said it had ended an agreement with Gumin Company Ltd and Hai Au Aviation to set up a low-cost carrier, signed in March 2017.

AirAsia had planned for the venture to start services in Vietnam by August this year.

In a tweet early on Thursday, AirAsia group chief executive Tony Fernandes said Vietnam remains "very much in the plan".

"I am still optimistic of airasia (sic) being in Vietnam by end of the year. Watch this space. Picking the right one," he tweeted.

Vietnam is one of Asia's fastest-growing economies and air travel is booming, with domestic and inbound passenger numbers rising at double-digit rates last year.

AirAsia, which swung into the red in the fourth quarter of 2018 for the first time in more than three years, said it "remains interested in operating a low-cost airline in Vietnam due to its favourable geographical location, expanding aviation market and overall growth potential".

The launch of a fifth Vietnamese airline in January has intensified competition and added strain to the country's aviation infrastructure.

AirAsia already has offshoots in Indonesia, Thailand, India, Japan and the Philippines.

REUTERS