BANGKOK (eTN) – With an average economic growth rate of 8% a year and a population of 80 million individuals, Vietnam is an increasingly attractive place to do business. And with the perspective of the ASEAN single market in 2015, more and more investors are also looking at Vietnam. IATA in January indicated that Vietnam air transport is poised to be the third fastest-growing market in terms of international passengers by 2014 with an average rate estimated at 10.2%, twice the world average.
The country will also turn into the second fastest-growing market for domestic passenger traffic at the same time. According to data released by the Vietnam Civil Aviation, passenger traffic in 2010 surged by 20% to reach 21 million, while international passenger volume reached 10.7 million, also up by 20%. The largest carrier is Vietnam Airlines, which had a market share of 58.6% of all passengers’ movements. Vietnam Airlines carried last year 12.3 million passengers, up by 33.7% over 2009.
So this was no surprise to see low-cost carriers looking at a share of the pie. Both AirAsia and Jetstar started courting local carriers in 2007/08, but so far achievements have been disappointing. Jetstar, which entered a joint venture with Pacific Airways, rebranded the carrier in 2008 into Jetstar Pacific. It is now embattled in a controversy with Vietnam Civil Aviation and the Ministry of Transport about the use of the name and the logo.
The Civil aviation requested Jetstar Airways to change Jetstar Pacific’s logo, abandoning the orange star and “Jet” logo used for all the aircraft of the Australian carrier in both Australia and Singapore. The authorities told Jetstar that the use of the same logo as its Australian counterpart would make passengers confused. It also requested a dedicated website for online sales of domestic tickets as it could “lead to turnover bleeding with the general website.” Due to the logo issue, Jetstar Pacific was denied international traffic rights. The carrier has been waiting for over 2 years now to get government’s green light to start flying from Ho Chi Minh City to both Bangkok and Siem Reap with no success.
Troubles faced by Jetstar did not seem to deter AirAsia from creating a subsidiary. In February 2010, the carrier announced a joint venture with VietJet Air, a private carrier which received a flying license back to December 2007. AirAsia holds a 30% stake in the carrier named “VietJet AirAsia.” However, it has been a year now that AirAsia has been looking to find an issue on the brand name. The Malaysia-based carrier faces the same hurdles for Jetstar. However, AirAsia announced in April its intention to withdraw from the capital of VietJet as no compromise seemed to have been found. By the end of June, traffic rights for VietJet are due to expire as it did not start services.
According to the latest document issued by Vietnam’s aviation authorities, foreign firms cooperating with Vietnamese firms are not allowed to use their logos and images. However, originally, there are no indications that a foreign company involved in a joint venture cannot use its own name for a commercial franchise. But behind a simple story of the logo, the Vietnamese government just simply found the legal way to deny new entrants into the Vietnamese market, with a clear sign that the well-being of national carrier Vietnam Airlines remains of utter importance.
It remains to be seen what could happen in 2015 when the ASEAN single market comes into force. How long will the Vietnamese government be able to deny ASEAN carriers to fly anywhere out of the country? For now, the Vietnamese government is buying time and is the current winner of its feud with foreign investors about logos and brands. In a recent interview, AirAsia Group CEO Tony Fernandes explained that he was now concentrating on the development of its new subsidiary in the Philippines. Vietnam is already fading away in his memory.