Qantas is seeking to transfer its 30% stake in Jetstar Pacific to Vietnam Airlines. This would leave Vietnam Airlines with full control of the airline. And, with the Vietnamese market quite saturated, it is possible that the airline is wound down.
Qantas seeks to transfer 30% of shares to Vietnam Airlines
VietNamNet reports that Qantas is negotiating a transfer the entirety of Qantas’ shares in Jetstar Pacific to Vietnam Airlines. Currently, the Vietnamese flag carrier holds just under 70% of the carrier while Qantas has 30%. This transfer would give Vietnam Airlines full control over the carrier.
The last few years have been a bit rough at Jetstar Pacific. In 2011, Jetstar Pacific was on the verge of shuttering amid rough financials. Vietnam Airlines and Qantas partnered on and worked to restructure and turn around the low-cost carrier. The carrier has not yet reached that state, however, Qantas appears to be pulling out of the carrier.
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The deal is still undergoing negotiations. Neither airlines have transferred stakes yet and regulatory approval will likely be needed.
More about Jetstar Pacific
The more popular Jetstar is Jetstar Airways which is based in Australia. This is the low-cost arm of flag carrier Qantas. The Jetstar Group network, however, is big with subsidiaries based in Singapore, Vietnam, and Japan. Jetstar Pacific is the Vietnamese branch.
Unlike Jetstar Airways, the Vietnamese branch only flies Airbus A320ceo aircraft on short- and medium-haul services in the region.
What could Vietnam Airlines do with Jetstar Pacific?
There are four main carriers based in Vietnam: Bamboo Airways, Jetstar Pacific, VietJet Air, and Vietnam Airlines. VietJet is a major low-cost carrier with huge expansion plans. And, Bamboo Airways is a startup that is equally ambitious not just with short-haul, but even long-haul aspirations. Combined, this puts pressure on Vietnam Airlines.
There are two options for Vietnam Airlines. It could either absorb Jetstar Pacific into its own operations and retire the brand entirely. This would allow for some market consolidation and give Vietnam Airlines additional A320 aircraft with which to grow its presence. The airline already operates a number of A321 and A321neo aircraft. These aircraft could further supplement long-haul routes flown with Boeing 787 and Airbus A350 aircraft.
The other option would be to operate Jetstar Pacific as a low-cost arm. It is unclear if naming rights would be part of the deal, however. Operating the carrier as a separate low-cost arm would give Vietnam Airlines a two-front approach to combat competition from a full-service and low-cost carrier. However, VietJet Air has a large number of aircraft on order and it is unclear if Jetstar Pacific could expand to rival that in enough time to mount serious competition. Or, perhaps, it could just remain a moderately-successful low-cost carrier poking a thorn in the side of VietJet Air.
Do you think Jetstar Pacific should be shut down or remain flying? Let us know in the comments!
Reporting by Jay Singh @ Simple Fling