Low-cost airline Jetstar Pacific will merge with national flag carrierVietnam Airlines in the near future, according to deputy head of theCivil Aviation Administration of Vietnam (CAAV) Dinh Viet Thang.
The move is considered the most feasible plan to save the carrier from bankruptcy.
The Ministry of Finance and the Ministry of Transport have agreed tothe move, which is awaiting approval from the Prime Minister, said Thangduring a briefing at the Ministry of Transport late last week.
Thang said that Jetstar Pacific was operated by the State Corporationfor Investment and Capital (SCIC) for several years under a low-costmodel but is now facing difficulties due to inefficient operation thathas caused heavy losses. SCIC, which uses State capital to invest inbusiness, is now the biggest shareholder in Jetstar Pacific.
Restructuring the company is essential, he said.
The Finance Ministry has kept the Prime Minister informed about themerger and participants at some recent Government meetings have outlineda number of different plans. The most effective plan is for the airlineto transfer its capital to Vietnam Airlines, said Thang, adding thatthe timing of the merger will be decided by the Government.
Vietnam Airlines is the top carrier in the country with an 80 percentmarket share, while Jetstar is second with about 17 percent. Uponfinalisation of the merger, Vietnam Airlines market share will increaseto nearly 100 percent, Thang said.
This will be the first merger in the country's history of aviation, he said.
He acknowledged that Vietnam Airlines will gain a monopoly in the localmarket with the merger but said that even without the merger, the Stateowned airline already has a lion's share of the market.
However, he affirmed that the merger is not bad for the domestic airlinemarket because the Government and the Ministry of Transport willcontinue to expand the market by allowing more private airlines tocompete. He added that Vietjet Air began operating this month./.