Australia's Qantas Airways is in talks to acquire a minority stake in Vietnam's Pacific Airlines as part of its Asian expansion strategy.
The talks come as Pacific, Vietnam's second state-owned carrier after Vietnam Airlines, has transformed itself into a low-cost/low-fare airline - a change it had been working on since early 2005. Airline sources say that discussions between Qantas and Pacific include its possible rebranding as Jetstar.
The Vietnamese carrier says it plans a fleet of around 20 Boeing 737s within five years. Managing director Luong Hoai Nam says Pacific's relaunch has seen the introduction of new domestic and international fares and adoption of a simplified business model. "We will give you $1 fares and become a low-cost airline," he says. Pacific serves domestic destinations and Taipei and Kaohsiung in Taiwan.
Qantas has been seeking to boost its presence in Asia by penetrating the region with its own low-cost subsidiary Jetstar, which last year launched long-haul services including to Ho Chi Minh City, and by buying into Asian airlines. Qantas chief executive Geoff Dixon predicts middle-class Asian tourists will be the biggest single factor in global tourism over the next 20 years, so Asian growth is a strategic Qantas goal.
Dixon has called it "hugely important to Australia, so much so that Asia will soon provide Qantas with more aviation traffic than the rest of the world combined". Jetstar's inability to form an intra-Asian network because of its limited fifth freedoms convinced Qantas that its Asian strategy required it to buy into, or set up, local airlines to fly between Asian points not served by Jetstar.
One such market Qantas considered was Indonesia, but chief financial officer Peter Gregg says it is no longer talking with Jakarta-based Adam Air. In Singapore, Qantas holds more than 40% of Jetstar Asia, and recently reconfirmed its intention to keep that stake. Jetstar Asia links Singapore with 14 cities in Asia-Pacific including Ho Chi Minh City.
Qantas and Jetstar Asia have adopted a strategic agreement to co-ordinate routes and schedules, but Jetstar Asia has struggled to gain access from Singapore to other points in Asia. Gregg, who is also chairman of Jetstar Asia, still insists that "Jetstar Asia will continue to be an important part of the Qantas Group's diversification strategy".
The private investor group that is bidding to take over Qantas (see story below) says it supports the planned investment in Pacific Airlines as part of Qantas' expansion into Asia.
Source: Airline Business
