Vietnam Airlines to hold state stake in Jetstar Pacific
By Binh Nguyen - The Saigon Times Daily
HCMC - The Prime Minister has approved transfer of the majority state stake at Vietnam’s low-cost Jetstar Pacific Airlines currently held by State Capital Investment Corp. (SCIC) to Vietnam Airlines Corporation.
Effective on January 16, Decision No. 94/QD-TTg was signed by Deputy Prime Minister Vu Van Ninh following a proposal by the Ministry of Finance.
Le Song Lai, deputy general director of SCIC, said the change in state ownership at Jetstar Pacific would help cut costs at the loss-making airline and would not affect competition in the country’s aviation market, as the carrier’s passengers were low- and medium-income earners while Vietnam Airlines targeted medium- and high-income passengers.
SCIC confirmed that the state ownership transfer was not a merger and that Jetstar Pacific and Vietnam Airlines would operate as two different entities and independently after the major change. Jetstar Pacific will continue to operate as a budget carrier after the transfer.
Over the past years, SCIC had been assigned by the Ministry of Finance to assume the state ownership of nearly 70% at Jetstar Pacific. Australia’s Qantas Group owns 27% of Vietnam’s second largest airline after Vietnam Airlines and the remaining stake is held by local shareholders, including Saigontourist.
According to the Civil Aviation Administration of Vietnam, Vietnam Airlines and Saigontourist owned up to 86% of Pacific Airlines in 2004. Later, Vietnam Airlines’ stake at this airline was transferred to SCIC at a time the airline faced a host of financial difficulties.
In 2009, Qantas said it had obtained a 27% stake in Jetstar Pacific from the previous 18% and would reserve the option to increase its ownership to 30% in accordance with a deal the group clinched with SCIC in Hanoi in April 2007.
In May 2008, Pacific Airlines completed its transformation plan to operate under the no-frills airline Jetstar Pacific, using the Jetstar logo for its domestic business in line with a strategic and commercial partnership with Qantas’s airline Jetstar.
SCIC said it had discussed with Qantas and Vietnam Airlines about the transfer as well as Vietnam Airlines’ duties at Jetstar Pacific when the transfer was completed. The airline corporation will appoint personnel to sit in the carrier’s board of directors.
Currently, Jetstar Pacific conducts daily flights from HCMC to Hanoi, Danang, Vinh and Haiphong.