The Vietnamese Ministry of Transportation approved the share acquisition. VietJet AirAsia will be operating both domestic and international flights, with AirAsia to "provide technical, operational and commercial support on an arms length basis to ensure commercial, operational, branding and service level uniformity throughout AirAsia’s operations".
It is currently finalizing details regarding routes, frequencies and launch of flights, and is expected to commence operations between April and June, subject to relevant approvals. Following the completion of the share transfer, the shareholding structure in the carrier shall be AirAsia with 30%, SOVICO Holdings with 51% and Nguyen Thanh Hung (SOVICO Chairman) with 19%.
This is a slick move. Vietnam is a high growth market and its labor costs are very low. By creating a franchise AirAsia guarantees itself access to both opportunities and simultaneously opens up new markets under another flag. Of course customers will no doubt be able to change airlines, but remain within the franchise, at KL for example. This could enable a traveler (one of these days) to fly from Vietnam to Oakland, California over KL for probably under $500. AirAsia can make money with an A340 using this low cost model and high load factors.
In other news:
- BA hedges labor bets
- More Koito fallout
- US domestic January numbers
- Brazil keeps roaring ahead
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