Vietnam Airlines

Rapidly expanding Kenya Airways charts growth with plan to serve every inhabited continent by 2017

Kenya Airways plans to launch its first services to North America, South America and Australia by 2017, making it one of the few carriers to serve every inhabited continent. While these three continents will give Africa's currently fifth-largest airline by seats a global presence, its future is pegged on Asia, with the carrier over the next 10 years planning to launch seven new routes into China, six in the Indian Subcontinent and three across North and Southeast Asia as well as having a growing presence in Europe and the Middle East. It is poised to become Africa's largest carrier.

Growth will be fuelled by Africa's status as a burgeoning market, as well as reliance on partners: Kenya Airways will open routes to SkyTeam member hubs in Xiamen (Xiamen Airlines), Hanoi (Vietnam Airlines), Seoul (Korean Air), Moscow (Aeroflot) and Prague (Czech Airlines). The intercontinental focus follows Kenya's strong emphasis on regional Africa, with the carrier aiming to serve every African nation by the end of 2013. 

Jetstar Pacific to become Vietnam Airlines’ low-cost carrier in salutary move to both

The nascent and, at times, challenging Vietnamese market will undergo a positive structural shift following Vietnam Airlines taking over a majority 70% shareholding in Jetstar Pacific, the Qantas Group’s Ho Chi Minh-based low-cost subsidiary. Qantas at the same time is increasing its share in the carrier, which was previously majority owned by the Vietnamese State Capital Investment Corporation (SCIC), from 27% to 30%. Jetstar Pacific is expected to become Vietnam Airlines’ only LCC brand/subsidiary, replicating in Vietnam the Qantas-Jetstar dual brand strategy pioneered in Australia and the new dual brand strategy at Japan Airlines – which also has turned to Jetstar to launch an LCC brand/subsidiary.

Vietnam Airlines had been planning to launch its own LCC in 2014, but is now expected to instead piggyback on the established LCC Jetstar Pacific and be able to grow its presence in the budget sector in a faster time frame. The Qantas Group will contribute AUD7.5 million (USD8 million) as part of a wider AUD25 million (USD26.7 million) capital injection at Jetstar Pacific. The capital will be used in part to accelerate Jetstar Pacific’s long-delayed fleet renewal programme. The carrier's four remaining ageing Boeing 737-400s will finally be replaced with A320s this year and its A320 fleet, which now stands at only two aircraft, is expected to grow to 15 aircraft within the next few years.

Outlook of Jetstar Pacific uncertain with possible Vietnam Airlines stake

The future of Jetstar Pacific, the Vietnamese low-cost subsidiary of the Qantas Group, is uncertain following various reports state-owned Vietnam Airlines may takeover the 70% local shareholding from other state-owned companies, Saigontourist and the State Capital Investment Corporation. Vietnam Airlines already has dealings with the Qantas Group by way of a codeshare on flights between Australia and Vietnam.

While the transfer, if it proceeds in the medium- or long-term, may appear to be a paperwork exercise, it could change Vietnam's emerging low-cost carrier market, which at 18.6% has one of the lowest domestic penetration rates in Asia and the world. It is an evolving story we have been following, and one that shifted when Vietnam Airlines announced its intention to launch its own LCC unit by 2014, as we reported last month.

VietJet launch not affected by AirAsia pullout

AirAsia’s decision last week to not go forward with its Vietnamese joint venture is a major setback for the AirAsia Group and Vietnam’s promising aviation market. But by no means does it spell an end or even a delay for AirAsia’s Vietnamese partner, VietJet Air, which is moving forward with plans to launch services in Dec-2011 without AirAsia.

Vietnam’s LCC market poised for explosive growth as VietJet AirAsia launches and Jetstar expands

The Vietnamese aviation market is poised for significant low-cost carrier growth as a new AirAsia affiliate launches services at the end of this year and the country’s first LCC, Jetstar Pacific, plans to finally implement long-delayed expansion plans. Meanwhile flag carrier Vietnam Airlines is preparing to launch its own LCC subsidiary or unit by 2014. Three LCCs may seem like too many for a market which last year consisted of only about 20 million passengers, but is reasonable when considering the rapid economic growth in the country and the small size of its LCC sector compared to other ASEAN countries.