“The Company wishes to announce that its wholly-owned subsidiary AirAsia Investment Limited, together with Gumin Company Limited and Hai Au Aviation Joint Stock Company, have amicably agreed to terminate and release each other from all obligations under the transaction agreements in relation to the proposed joint venture in Vietnam, effective 17 April 2019,” says AirAsia in a statement.
The carrier initially announced the joint venture in March 2017, and had reiterated its commitment to the initiative in December 2018.
The decision marks a setback for AirAsia chief executive Tony Fernandes, who views Vietnam as a core part of Southeast Asia’s airline industry.
In December 2018, when AirAsia restated its commitment to its joint venture partners, Fernandes had this to say: “AirAsia is an [Association of Southeast Asian Nations] airline. And in Asean, Vietnam is one of the last remaining countries with a large population we’re not in. Today’s memorandum reaffirms our commitment to making AirAsia in Vietnam happen. Last year, when we announced this JV, we were bullish about Vietnam and we remain incredibly bullish about serving one of the most dynamic, fastest-growing economies in Asia.”
The departure from the Vietnam joint venture with Gumin and Hai Au marks AirAsia’s third failure to start an airline in Vietnam.
In September 2007 it signed a letter of intent with Vietnam Shipbuilding Industry Corp (Vinashin) to set up a Hanoi-based airline, but in 2008 Hanoi abruptly decided not to award new operator licenses. Vietnam Airlines was bitterly opposed to the new airline.
In 2010 AirAsia tried again with a plan to buy 30% of start-up VietJet, but again Vietnam Airlines opposed AirAsia’s entry. It was even hostile to the proposed name of the new carrier, VietJet AirAsia.
In 2011 AirAsia dropped out of the venture citing several issues. One it specifically mentioned was the Vietnam authorities’ unwillingness to allow use of the AirAsia name in Vietnam. Eventually, VietJet Air took to the air without AirAsia.
Despite the most recent set back, AirAsia maintains that it is still interested in Vietnam owing to its geography, growing aviation market, and overall potential.