Saturday, May 1, 2010

Aviation body wants VietJet Air to be genuinely local

14 April 2010

VietNamNet Bridge – A tentative plan by VietJet Aviation Joint-stock Company (Vietjet Air) to operate under the new brand of Vietjet AirAsia will most likely be barred as the Civil Aviation Administration of Vietnam (CAAV) wants it to bear a purely Vietnamese name.

Lai Xuan Thanh, deputy director general of CAAV, said Vietjet Air should not develop the brand Vietjet AirAsia that looks exactly like an arm of Asia’s leading low-cost carrier AirAsia that has a stake in the local carrier. Only the word "Vietjet" is accepted.

CAAV in a new document sent to local air carriers but targeting Vietjet Air said they should operate as a truly local carrier with their own brands and logos to avoid any problem as happened to Jetstar Pacific.

Thanh told the Daily on the phone on Monday about the concern after CAAV sent Document 1064/CHK-VTHK to domestic airlines to warn them against using and promoting the brand and logo of a foreign airline for their marketing and flights.

"Vietjet Air must be a domestic airline and create its own logo," Thanh said, adding that Vietjet Air should not be considered and mistaken as an airline in Vietnam under the Malaysia-headquartered carrier when it operates as Vietjet AirAsia.

Last week, leaders of Vietjet Air and AirAsia said after signing a strategic partnership agreement that Vietjet Air would operate as a Vietnam-based budget airline under the tentative trade name of Vietjet AirAsia. This carrier plans to commence services from August this year.

However, Thanh of CAAV said Vietjet Air had not been licensed to operate as Vietjet AirAsia. He explained that AirAsia’s acquisition of a 30% stake in Vietjet Air did not mean it would fly under the brand and logo of the Malaysian airline.

A similar problem happened to Jetstar Pacific in November last year when Minister of Transport Ho Nghia Dung told this Vietnamese low-cost carrier to scrap the logo of Australia’s carrier Jetstar Airways characterized by the word Jet and the orange star on its aircraft because this misled people as they might misunderstand the local airline with the Australian carrier.

As a result, "Jetstar Pacific was now developing its own logo and brand," Thanh said, adding that "otherwise it will not be granted the right to fly on new routes".

Also, this carrier has been ordered to clarify how to manage its fare revenue through the website In the above-mentioned document, CAAV also dictates that a foreign airline is not allowed to control business, revenue and profit of a Vietnamese airline via the only website they use.

"We want to look into whether a foreign carrier counts on a website to decide revenue and profit of a local company," Thanh explained.

Thanh said a local airline is allowed to sell fares and services via the website of a foreign carrier if it is able to prove that its revenue is not manipulated by its foreign partner.

"This is the point that matters us most," Thanh said. He acknowledged that a local carrier sharing the website with its foreign partner was still new in Vietnam, referring to the website, on which passengers can book seats on the flights operated by Jetstar Airways and Jetstar-brand airlines including Jetstar Pacific.

Airline experts said the revenue of Jetstar Pacific was hardly controlled by its foreign partner as up to 80% of its fares were booked at ticketing offices and agents of the local airline, and the rest online. So, the majority of the revenue goes directly to the budget of Jetstar Pacific.


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