AirAsia’s ambitions for a new subsidiary in one of Asia’s fastest growing aviation markets is back on hold, following a new filing with Bursa Malaysia.
Under the filing, AirAsia Group Berhad is scrapping its planned subsidiary in Vietnam has amicably agreed to terminate and release each other of all obligations along with the joint venture partners Gumin Company Ltd and Hai Au Aviation Joint Stock Company.
Announced last December, the Vietnam subsidiary was scheduled to have a debut flight in August 2019 to compete with Vietnam-based low cost carriers VietJet and Bamboo Airways. As part of the deal, AirAsia Group Berhad would have taken 30% ownership to adhere to Vietnamese laws regarding foreign company ownership.
A Vietnam subsidiary would have added to AirAsia’s presence in the ASEAN region, along with its existing group airlines based in Malaysia, Indonesia, Thailand, and the Philippines. Like its counterparts in Asia, Vietnam's aviation scene has seen the rise of low cost carriers such as Jetstar Pacific and VietJet.
Vietnam has long been a market AirAsia has aspired to enter with a domestic-based subsidiary. The first attempt in 2007 was blocked by Vietnamese government officials, followed by a deal to take 30% stake in VietJet in 2010. Both met resistance from the Vietnamese government.
Despite this recent setback, the airline is still hopeful to one day open its own Vietnam-based subsidiary. "The company, nonetheless, remains interested in operating a low-cost airline in Vietnam due to its favourable geographical location, expanding aviation market and overall growth potential,” the airline said in the filing.