<article>Malaysian budget carrier <a style="color: #000080;" href="http://www.dealstreetasia.com/stories/60760-60760/" target="_blank">Air Asia Bhd</a> is forming a $43.8 million (VND 1 trillion) joint venture for a low-cost airline in Vietnam where Air Asia will contribute 30 per cent of the capital to the JV, that is expected to start flying early next year.</article>

Malaysian budget carrier <a style="color: #000080;" href="http://www.dealstreetasia.com/stories/60760-60760/" target="_blank">Air Asia Bhd</a> is forming a $43.8 million (VND 1 trillion) joint venture for a low-cost airline in Vietnam where Air Asia will contribute 30 per cent of the capital to the JV, that is expected to start flying early next year.
Businessman Tony Fernandes-headed Air Asia&#8217;s wholly-owned subsidiary Air Asia Investment Ltd (AAIL) inked a deal with Gumin Co Ltd, Hai Au Aviation Joint Stock Company (HAA) and businessman Tran Trong Kien for the shareholders and share subscription agreement which will see Air Asia investing over $13.15 million in the venture, according to a filing at the stock exchange on Friday.
HAA, an operator of general aviation business in Vietnam, will form the vehicle for the joint venture, it said. Gumin will hold 69.9 per cent of the shares in the vehicle.
Vietnam will be the latest in the list of Asian countries where Air Asia operates through partnerships in the budget airline business. In a bid to build a pan-Asia airline, <a style="color: #000080;" href="http://www.dealstreetasia.com/stories/air-asias-tony-fernandes-startup-incubator-tune-labs-invests-in-malaysias-golfreserv-55637/" target="_blank">Tony Fernandes</a>-led airline has partnered with players to operate in India, Indonesia, Japan and Thailand. It also has a long haul operation Air Asia X.
&#8220;The rationale for the Joint Venture is to be an airline in Vietnam which offers an affordable but high-quality airline service to Vietnamese and foreign tourists by leveraging the best-in-class LCC business model which is expected to give the Vietnamese population a greater choice as well as spur overall economic growth,&#8221; said Air Asia.
It added that a sizable population of 95 million in Vietnam along with the economic expansion in the country is a great potential for growth in Vietnam. &#8220;This clearly presents an opportunity for another low cast carrier to enter into the market. In addition to that, the middle class population is expected to represent 23 per cent of the total population by 2020, which will further fuel the growth of air travel in Vietnam,&#8221; it said.
AAIL and the joint venture company have also signed a new shareholder loan agreement where AAIL will be providing a loan of $2 million (MYR 8.84 million). Separately, Gumin will also be providing a loan amounting to $4 million (MYR 17.68 million) to the joint venture company.
AirAsia has conducted a feasibility study prior to entering into the Joint Venture and, based on the study, it is forecast that the JV will be operationally feasible and commercially viable and is expected to contribute positively to AirAsia’s financials both directly and indirectly in the future.
Vietnam is the fifth largest <a style="color: #000080;" href="http://www.dealstreetasia.com/stories/goair-revives-ipo-plan-as-aviation-stocks-soar-66906/" target="_blank">aviation market in South East Asia</a> after Indonesia, Thailand, Malaysia and Singapore. In fact, it was the fastest growing aviation market both in the world and in South East Asia in 2015 and 2016.
In terms of passenger carriage (domestic and international), Vietnam’s air travel passenger carriage in 2016 was 52 million, with its growth dwarfing its ASEAN peers’, charting approximately 28 per cent year-on-year growth in 2016 vis-à-vis its ASEAN peer’s average growth of approximately 10 per cent.
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Air Asia Bhd is forming a $43.8 million (VND 1 trillion) joint venture for a low-cost airline in Vietnam

Air Asia to invest in $43.8m JV for low-cost airline in Vietnam

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Air Asia to invest in $43.8m JV for low-cost airline in Vietnam

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