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KUALA LUMPUR: April 06, 2017. Air Asia is to launch a low-cost carrier in Vietnam together with local shareholders Gumin Company, Tran Trong Kien, and the Hai Au Aviation Joint Stock Company (HAA).

Air Asia ShenzhenHAA, currently operating a general aviation business in Vietnam, will be used for the new joint venture that will require US$44 million in new capital with plans to begin services next year.

To comply with Vietnam aviation limits on foreign shareholders, AirAsia will hold 30 percent in the new venture while Gumin will hold 69.9 percent and Mr. Tran one share.

Noting the success of the operation "is highly dependent on its ability to operate to China as China is one of the main international markets for Vietnam," Air Asia said the venture is also subject to obtaining various Vietnam government licenses.

According to a filing with the Malaysia Stock Exchange, Air Asia pointed out that improving aviation connectivity in Vietnam would further support an uptick in GDP by providing a boost to tourism, export related industries, logistics, airport retailers and airline support industries.

The new airline plans to operate domestic and international services from Ho Chi Minh, Hanoi and Da Nang to key ASEAN destinations as well as Korea, China and Japan.

Vietnam is the fifth largest aviation market in South East Asia after Indonesia, Thailand, Malaysia and Singapore and was the fastest growing aviation market worldwide in 2015 and 2016.

The country's passenger traffic in 2016 was 52 million, a 28 percent year-on-year growth compared to a 10 percent average growth in other ASEAN countries.

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