AirAsia's Vietnam venture expects to begin flights in August

The Vietnam partner of AirAsia Group expects their new carrier to begin operations in August, joining the ranks of low-cost airlines in Southeast Asia as a growing middle class spurs many to travel by air.

The domestic airline will apply for its aviation license in February and expects to gain the necessary regulatory approvals within six months, said Tran Trong Kien, chief executive officer of Hanoi-based resort and seaplane operator Thien Minh Group, AirAsia's partner.

Vietnam has been a missing piece of the puzzle for Malaysian tycoon Tony Fernandes's AirAsia, Southeast Asia's largest low-cost carrier group with affiliates in key markets including Malaysia, Indonesia, Thailand and the Philippines. The new airline would become the latest entrant following Bamboo Airways this year in Vietnam, a market dominated by state-owned Vietnam Airlines JSC and private budget carrier VietJet Aviation.

Vietnamese Prime Minister Nguyen Xuan Phuc expressed support for the yet-to-be-named venture during a Dec 6 meeting with Mr Kien and Mr Fernandes, according to the Thien Minh Group CEO. The airline plans to deploy five or six Airbus SE A320 and A321 aircraft on domestic routes between Hanoi, Da Nang and other cities as well as for regional flights, and the fleet could expand to as many as 30 within three years, Kien said in an interview on Dec 7.

Under an agreement signed in March last year, AirAsia will hold a 30 per cent stake in Hai Au Aviation with Gumin, headed by Kien, controlling about 70 per cent, the Vietnamese businessman said. The airline targets to have a market share of 20 percent to 30 percent within a decade, he said.

Bamboo Airways, owned by FLC Group JSC, plans to begin flights on Dec 29. Thien Minh Group owns Victoria Hotels & Resorts in Vietnam and Laos, as well as Hai Au Aviation, which operates four tourist seaplanes out of Hanoi's Noi Bai International Airport. It also owns iVivu.com, Vietnam's leading online travel agency.

BLOOMBERG