Jetsar has denied a report that Jetstar Pacific is on the verge of being taken over by Vietnam Airlines, though it says it would support such a takeover.
The Ho Chi Minh City based budget carrier has struggled since Jetstar parent Qantas bought a minority stake in the airline in 2008 and rebranded it under the Jetstar name, and a report posted Wednesday in the Vietnam News said the carrier would be taken over by Vietnam Airlines as part of a plan to save it from bankruptcy. The report quoted the deputy head of Vietnam’s Civil Aviation Administration.
Jetstar had no response to the report through most of the day Thursday but released a statement late in the day dismissing what it called “erroneous” and “misleading” claims that Jetstar Pacific was about to be absorbed.
“Contrary to reports, no agreement has been formalised and the ownership structure for Jetstar Pacific remains unchanged,” the statement said.
But Jetstar said it continued to support a proposed ownership swap between the Vietnamese State Capital Investment Corporation, the current majority owner, and Vietnam Airlines. Qantas said its 27 per cent stake in the airline would be unaffected by the swap.
While Qantas said Vietnam Airlines would be “welcomed as a partner” in Jetstar Pacific, Vietnam Airlines has often expressed hostility toward the budget carrier, blaming it for undercutting fares and causing both airlines to lose money. Vietnam Airlines remains the dominant carrier in the country’s domestic market, with about 80 per cent of market share compared to Jetstar Pacific’s 17 per cent.
Jetstar Pacific has faced a host of problems in recent years, including safety violations and a government investigation into fuel hedging losses that briefly saw two Qantas executives barred from leaving Vietnam.
The vice president of the AIPA pilots union, which is locked in a long running labour dispute with Qantas, seized on the news Thursday as a cautionary tale about Qantas’s ambitions to expand in Asia, a major point of contention with unions.
“I think you can put whatever spin on it you want but the absorption of the low cost carrier into the mainline says that the business model didn’t work,” Richard Woodward told ABC Radio. “I think it proves that the road to business in Asia is not the golden road that [Qantas CEO] Alan Joyce and his management team have made it out to be.”