AirAsia is looking to expand its presence in the growing aviation market of Vietnam with a new domestic-based carrier in the country.

The Malaysian-based AirAsia signed a memorandum of cooperation with the Thien Minh Travel Joint Stock (TMG) and Hai Au Aviation Joint Stock Co (HAA) that would eventually lead to the formation of a new AirAsia subsidiary in Vietnam. While no firm date has been set for the proposed carrier’s launch, AirAsia will own around 30% of the new venture to follow Vietnamese laws limiting foreign company ownership.

“AirAsia is an Asean airline,” says group chief executive Tony Fernandes, referring to the Association of Southeast Asian Nations, a regional grouping.

“And in Asean, Vietnam is one of the last remaining countries with a large population we’re not in. Today’s memorandum reaffirms our commitment to making AirAsia in Vietnam happen. Last year, when we announced this JV, we were bullish about Vietnam and we remain incredibly bullish about serving one of the most dynamic, fastest-growing economies in Asia.”

The joint venture with TMG is AirAsia’s third attempt to launch its own subsidiary in Vietnam. A 2007 attempt was blocked by government officials, while a deal to take a 30% stake in VietJet in 2010 lapsed after backlash from the government and Vietnam Airlines.

TMG is Vietnam’s high-end tourism provider, using seaplanes and cruises to connect travelers to attractions in Ha Long Bay and the Mekong Delta. In addition to cruises and seaplanes, the company also operates hotels and resorts in Vietnam, Cambodia, and Laos.

For TMG, the joint venture would bring more connectivity for travel within Vietnam.  “Vietnam as a country needs better connectivity to continue this trend and for tourism to reach its full potential. Adding a new airline, especially at this stage and with an experienced operator like AirAsia, is a much needed and welcomed move. This new airline will bring more and better choices to our people in the years to come,” said TMG CEO and HAA general director Tran Trong Kien.

As the International Air Transport Association reported the country saw the highest growth rate in the region (17.4%), Vietnam already has a strong presence in the country with routes to Ho Chi Minh, Da Nang, Hanoi, Nha Trang and Phu Quoc. The new venture is expected to face stiff competition from VietJet and the newly formed Bamboo Airways.

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