Qantas and Vietnam Airlines Invest $181.5 Million in Pacific Fleet

27th Apr 2016

Vietnamese low-cost carrier Jetstar Pacific will apparently receive a very welcome investment from the Australian flag carrier Qantas and Vietnam Airlines of 181.5 million ($US139 million). This will help the LCC double the size of its fleet in the course of the next four years to 30 aircraft.

The Australian airline, which has a 30 per cent stake in Jetstar Pacific, will invest around 55 million dollars (US$42 million), while Vietnam Airlines will provide the remainder of the investment.

The investment will be provided in a number of tranches, the last one being in 2020. It remains to be seen where Qantas and Vietnam Airlines are to source their Airbus A320 jets needed for the expansion of Jetstar Pacific fleet. The Flying Kangaroo has 99 A320neo planes on order with the plane manufacturer Airbus for delivery from 2017 onwards.

Jetstar Pacific currently has 12 aircraft in its fleet and is flying to 23 destinations in Vietnam and abroad. However, the Centre for Aviation (CAPA) earlier announced its expectation for that number to rise to 18 per cent by the end of this year.

Jetstar Pacific has proven to be an important part of Vietnam Airlines, particularly for the budget end of the market. The parent company of Jetstar Pacific has faced some stiff competition from VietJet since the latter was established in late 2011.

About the competitive Vietnamese market, Centre for Aviation said the following:

"The evolution of the Jetstar Pacific model was inevitable but was slow to materialize, a mistake that has benefited VietJet."

CAPA also said that domestic capacity in Vietnam has almost tripled since 2011 and that VietJet is responsible for around two-thirds of the additional seats.

According to Le Hong Ha, Chief Executive Officer at Jetstar Pacific, the airline had reported a US$10.000 ($13.127) profit in 2015, following years of losses.

Although the Australian carrier said that its Asian arms are collectively profitable, Qantas did not reveal individual results for its Jetstar arms in Japan, Vietnam or Singapore in the first half of the previous year.