An AirAsia aircraft (Source: themalaysianinsider.com)

Hanoi (VNA) - Malaysia's AirAsia Group Bhd has announced to cancel its plan to enter Vietnam's aviation market, but said it was still keen on running a budget carrier in the country.

In a statement on April 17 quoted by Reuters, the Malaysian low-cost airline said it had ended an agreement with Gumin Company Ltd and Hai Au Aviation to set up a low-cost carrier. The pact was signed in March 2017. Previously, AirAsia had planned for the venture to start operation in Vietnam by August this year.

In a tweet, AirAsia Group Chief Executive Tony Fernandes said Vietnam remains "very much in the plan" and he is still optimistic of AirAsia’s presence in Vietnam by end of the year.

Vietnam is one of Asia's fastest-growing economies and air travel is booming, with domestic and inbound passenger numbers rising at double-digit rates in 2018.

AirAsia said it remains interested in running a low-cost airline in Vietnam due to local favourable geographical location, expanding aviation market, and overall growth potential.

However, the launch of a fifth Vietnamese airline – Bamboo Airways – in January has intensified competition and added strain to the country's aviation infrastructure.-VNA