Malaysian budget carrier in talks to establish AirAsia Vietnam

Malaysian carrier AirAsia is in discussions to set up a branch in Vietnam, adding to its overseas presence in Malaysia, Thailand, the Philippines, Indonesia, and Cambodia.

According to AirAsia CEO Bo Lingam, the global aviation industry has been transformed as the post-pandemic reopening unleashed a wave of pent-up travel demand that’s sent ticket prices surging faster than inflation in many parts of the world.

At the same time, a series of supply chain constraints from aircraft delivery delays to unplanned engine maintenance has left many airlines struggling to roll out enough flights, he said.

For AirAsia, the demand is underpinning ambitions to establish the world’s first low-cost carrier network by 2030, using its Southeast Asia bases as a hub, he added.

AirAsia was founded in 2001 when it bought a bankrupt airline with only a few planes for 1 ringgit. Since then, AirAsia has quickly risen to become the largest low-cost airline in Southeast Asia. It is also Malaysia's largest carrier by fleet size, operating flights to more than 166 destinations spanning over 25 countries.

AirAsia has not established any legal entity in Vietnam and only operated international flights on aircraft carrying other countries’ flags. Every week, the airline provides an average of 117 flights connecting a number of Vietnamese cities with Thailand and Malaysia.

Previously, AirAsia tried to enter the Vietnamese aviation market four times but all failed.

In 2005, AirAsia joined a race to become a strategic shareholder of Pacific Airlines. However, the winner was Australia's Qantas.

After the first unsuccessful attempt, the Malaysian carrier tried a second time in 2007. Persevering with the strategy of forming joint ventures with domestic units to establish a new airline, it chose Vietnam Shipbuilding Industry Group (Vinashin) as its partner.

The two sides reached an agreement under which AirAsia would be in charge of the flights and contribute 30% of the capital, while Vinashin would complete procedures for a license to establish an airline. However, the plan also failed.

In 2010, AirAsia once again failed to bring its brand to Vietnam when it entered into a joint venture with private carrier Vietjet Air.

In early April 2017, it announced a joint venture with tourist service provider Thien Minh Travel and Hai Au Aviation to establish a new airline, which was planned to take off in 2018. However, this fourth attempt by AirAsia was still a failure.

After many fluctuations, the Vietnamese aviation market is in the hand of two major "players": national flag carrier Vietnam Airlines and private airline Vietjet Air. Vietnam Airlines also holds nearly 99% of shares in Pacific Airlines, the first low-cost airline in Vietnam. In October 2020, Qantas Group divested its stake in the carrier, transferring 30% of its shares to Vietnam Airlines as a “gift.”

After undergoing restructuring, Pacific Airlines took off again on June 26, 2024, using Airbus A321 aircraft to operate flights on several domestic routes.