QANTAS: to exit Vietnamese airline – Jetstar Pacific

I suspect Qantas will be sighing with relief in the next months as they exit from this troubled partnership.

The relationship between Vietnam Airlines and Qantas has been a rocky one, including a period where Qantas executives were held in Vietnam.

History

Qantas partnered with Vietnam Airlines to form the joint venture ‘Jetstar Pacific in 2007. The airline was previously named Pacific Airlines and originated in 1990 as a cargo charter airline. The move was part of a wider plan to establish the low-cost Jetstar brand as a presence in Southeast Asia.

The airline did not start well amid increased fuel costs, it started and stopped routes to Nah Trang, deferred new routes to Bangkok and Siem Reap. However it did make its first profit in 2009, of a little over US$1 million.

There was also some pissing in corners weirdness around branding, with the Civil Aviation Administration of Vietnam arguing that there was potential confusion with Jetstar Airways (Qantas’s Australian based low-cost airline), and it didn’t want some offshore company (Qantas) profiting on the back of a Vietnamese based company, so they should change their name – or something. It didn’t.

Fuel hedging and detention

In 2009 the CEO abruptly left, and that event was followed by a scandal about fuel hedging reportedly costing the company US$31 million and also included the detention of the COO and CFO in Vietnam – both Australians in 2010. The two executives were freed after the airline agreed to a secret ‘commercial package‘ with the State Capital Investment Commission – the investment arm of the Vietnamese Government. The couple was released in June 2010.

Outcome

The result of Qantas exiting the agreement will see the airline drop the Jetstar branding, and return to its original name: Pacific Airways, adopting Vietnam Airways branding colours, a new logo, and moving form the Navitaire to Sabre the Vietnam Airways booking system.

According to reports in The Star, this is also to do with COVID-19, apparently.

2PAXfly Takeout

The aviation industry has a difficult road ahead when it comes to sustainability. It’s going to require a relative revolution in technology, with ‘electric planes’ or hydrogen planes, or some form of jet engine that doesn’t require a carbon based fuel. And that is going to require the development of an alternative to jet engines probably.

It’s a big ask. It will take time to develop.

This move to home grown and manufactured SAF is a first step – maybe even a baby step in a very long road of innovation. In the long run, US$200 million won’t even touch the sides.

This will reduce the Jetstar Group’s airlines from 4 to 3, with the group having associated airlines in Australia/NZ, Singapore (Jetstar Asia Airways), and Japan (Jetstar Japan). What effect this will have on Qantas/Jetstar ambitions in Asia remains to be seen.

Do you remember Qantas ambitions to run a luxury airline in Asia?