The Prime Minister has allowed national flag carrier Vietnam Airlines to take over the entire state-owned capital of budget airline Jetstar Pacific.
State Capital Investment Corporation (SCIC) owned Jetstar Pacific Airlines has taken losses for many years.
SCIC now holds around 70 per cent stake in Jetstar Pacific, with the remainder owned by Australia’s Qantas Airways and Saigontourist.
Despite restructuring, Jetstar Pacific has continued to rack up losses. Therefore to resolve the situation, the Ministry of Finance has submitted a proposal to the PM to transfer the budget airline’s capital as a solution.
According to SCIC, the firm had worked with Qantas and Vietnam Airlines on the articles of the transfer case. Vietnam Airlines will take over all duties and rights previously held by SCIC at Jetstar Pacific and will appoint its representatives at Jetstar Pacific’s board of directors.
Currently, Vietnam Airlines already accounts for 80 per cent of the local aviation market share, followed by Jetstar Pacific with around 17 per cent. The capital transfer has raised public concern over Vietnam Airlines’ monopoly, which could affect the competitiveness in the domestic aviation sector.
Speaking with Dantri/DTiNews, Deputy Director of the Civil Aviation Administration of Vietnam (CAAV) Lai Xuan Thanh, said, after the transfer, Vietnam Airlines would only own the state-owed capital in Jetstar Pacific and assign its representatives to take part in Jetstar Pacific’s board of directors. Jetstar Pacific would remain an independent carrier.
The capital transfer is scheduled for completion before February 15 this year.