Budget airline group AirAsia has finally agreed a partnership to launch a domestic airline unit in Vietnam.
The Malaysia based airline has sealed a deal with Hanoi-based tourism operator Thien Minh Group to form the new regional airline to rival market leader Vietjet.
The two companies will invest in a fleet of Airbus A320s and A321s narrow body jets.
AirAsia will own 30% equity in the new venture, the maximum allowed under current foreign ownership rules.
No planned routes have been disclosed yet but AirAsia will likely focus on less competitive routes connecting gateway cities Hanoi, Ho Chi Minh City and possibly Da Nang.
It will probably open international services from Northeast Asia where AirAsia Group already has a major presence such as South Korea, China, and Japan as well as routes from Southeast Asia.
AirAsia already has regional affiliates based in Thailand, Japan the Philippines, and Indonesia, but recently gave up on plans to open a China-based domestic unit.
"We expect to enhance our contribution to Vietnam’s aviation and increase locals in one of the most promising markets in the region," AirAsia CEO Tony Fernandes said at the signing ceremony.
Partner Thien Minh Group is a major tourism industry player in the region with hotels and resorts in Vietnam, Laos and Cambodia.
It also operates seaplane services in Northern Vietnam.
