Jetstar Pacific pins hopes on Vietnam rejig
Jetstar is supporting a shake-up in the ownership of its troubled Vietnamese offshoot, Jetstar Pacific, in a deal that will result in it and the national flag carrier, Vietnam Airlines, carving up the south-east Asian nation's travel market into low-cost and premium segments.
Under a tentative agreement that is still some months from completion, the Vietnamese government will transfer a 70 per cent stake in Jetstar Pacific held by its investment arm to Vietnam Airlines. Jetstar's parent, Qantas, is expected to increase its holding from 27 per cent to 30 per cent.
Jetstar's chief executive, Bruce Buchanan, said the airline supported a change in the ownership but he emphasised yesterday that there is a lot of water to go under the bridge with those discussions. Advertisement: Story continues below
We have a lot of success in executing two-brand strategies … and that could be leveraged in Vietnam for a lot of benefit, not only for the Vietnamese industry there but also Vietnam Airlines, he said.
The Vietnamese government initiated the ownership changes following several years of controversy for Jetstar Pacific. Last year two Jetstar-appointed executives at the Vietnamese airline were banned from leaving the country for more than six months while police investigated fuel-hedging losses. The budget airline has not turned a profit since Qantas bought into it in 2007.
Mr Buchanan said he did not expect difficulties from Vietnam's dominant airline taking majority control of Jetstar Pacific, likening it to Japan Airlines's stake in the yet-to-be launched Jetstar Japan.
Irrespective of our partnership and how else we can create benefits for the other partners, we have to stay true to the ultimate brand promise, he said.
Although the Vietnamese shareholder selects Jetstar Pacific's chief executive, the Australian airline maintains an influence by appointing the chief financial officer and other executives. Qantas also has two seats on a six-member board.
Meanwhile, Jetstar and Tourism Australia announced a $10 million marketing deal to help boost the number of Japanese tourists travelling to Australia and to expand awareness in other Asian markets. Japanese visitor numbers have dropped from more than 800,000 in 1997 to about 250,000 annually in recent years.
Jetstar's passenger traffic dropped by a third in the aftermath of the Japanese earthquake and tsunami in March, but has since recovered to levels slightly below those seen before the disaster.
However, Mr Buchanan said the market for travel to Japan remained depressed because of perceptions in other countries that the Asian nation was unsafe because of the disaster.
Jetstar has about 60 per cent of capacity on the Australia-Japan route, while Qantas and Japan Airlines each have about 20 per cent.
The Sydney Morning Herald - October 25, 2à11