Australian flag carrier Qantas and the recently privatised Vietnam Airlines have announced they will invest a total of $139 million to more than double the size of the Vietnamese joint venture, low-cost airline Jetstar Pacific‘s fleet, according to a Sydney Morning Herald report.
Qantas will fund $42 million for Jetstar Pacific, which is in line with its current ownership of 30 per cent in the JV, while Vietnam Airlines will contribute the remaining 70 per cent of the planned financing. The total number of Jetstar Pacific aircrafts is reported to increase from the current 12 to 30 units over the next four years.
The investment will be executed in tranches from now until 2020, the Australian publication said.
The latest announcement came as later last year, the two flag carriers agreed on a long-term expansion for their JV to boost its fleet, which will help Jetstar Pacific become Qantas’ largest offshore Asian budget airline.
In the first half of the Qantas financial year, Jetstar Pacific capacity rose by 48 per cent, although the percentage of seats filled dipped to 83.4 per cent from 88.3 per cent a year earlier, according to the Sydney Morning Herald.
The low-cost arm of heavily state-owned Vietnam Airlines, Jetstar Pacific, is in intensifying competition with Vietjet Air, the aviation company to create Vietnam’s first woman billionaire. With an IPO expected this year, Vietjet is going to overtake the domestic market with a 40 per cent market share, the CAPA Centre for Aviation said in a report earlier this year.
The rival has already reached the 30 aircraft milestone and is expected to add a staggering amount of 70 others by 2021.
“The evolution of the Jetstar Pacific model was inevitable but was slow to materialise, a mistake that has benefited VietJet,” CAPA said.
Jetstar Pacific released its profit result of VND267 million ($11,800) for last fiscal, saying it was the first profit ever gained in eight years.
The carrier is fostering its operation by opening new domestic routes and offering promotions, while Vietjet has also planned to launch three new domestic flights.