Jetstar’s Vietnam offshoot in spotlight amid sale talk

Qantas’ budget arm Jetstar says it is in discussions with its joint-venture partner Vietnamese Airlines about the future of local offshoot Jetstar Pacific, following reports it was moving to exit its minority stake.

Qantas owns 30 per cent of Jetstar Pacific in a joint-venture with Vietnamese Airlines, established in 2007 as part of a strategy by the airline to build up its presence in Asia through partnerships using the low-cost Jetstar brand.

Vietnamese news site VietnamNet reported the two owners have been in discussions for several months about Vietnamese Airlines taking full ownership of Jetstar Pacific, with talks ongoing.

A Jetstar spokeswoman said the airline was « in regular dialogue with our partner Vietnam Airlines about Jetstar Pacific, particularly given the challenges facing all carriers at present ».

« However, we don’t comment on speculation and we have no material changes to announce,” she said.

Vietnamese Airlines did not respond to a request for comment.

Qantas, like all airlines, has been battered by the coronavirus pandemic and related international and domestic travel bans. Most of Qantas’ fleet has been grounded and the company has stood down about 20,000 of its 30,000 employees.

Oliver Lamb, managing director of Ailevon Pacific Aviation Consulting, said he would not be surprised if Qantas exited Jetstar Pacific at a time when it was looking to save cash and trim non-core operations. “Everyone’s been wondering how long Jetstar Pacific’s operations were going to last, and whether or not it’s actually core to what Jetstar wants to achieve in Asia,” he said.

« If Qantas is looking to release cash or is looking at non-core assets, then Vietnam is probably central to that.”

Jetstar Pacific operates a fleet of 15 Airbus A320 aircraft, flying short-haul domestic and international routes.

Qantas boss Alan Joyce was running the Jetstar division in 2007 when it paid the Vietnamese government $30 million for an 18 per cent stake in what was then called Pacific Airways.

Qantas does not report on Jetstar Pacific’s financial results, other than a note in its accounts saying the airline was profitable last financial year. But the airline has reportedly been loss-making for much of its history.

Vietnam’s aviation market has become more competitive and crowded since Qantas moved to take advantage of increasing demand for air travel from the south-east Asian nation’s growing middle class. Budget carrier VietJet launched in 2011 and now operates 75 aircraft, while Bamboo Airways launched in January last year and is flying 25 aircraft.

Qantas’ other Asian franchises include its Jetstar Asia in Singapore, in which it owns 49 per cent in a partnership with local company Westbrook Investments; and Jetstar Japan, in which it owns one-third along with Japan Airlines, Mitsubishi Corporation, and Century Tokyo Leasing Corporation.

Qantas and China Eastern Airlines spent three years trying to establish Jetstar Hong Kong before local aviation authorities rejected their licence application.

By Patrick Hatch – The Age – April 13, 2020