National carrier Vietnam Airlines will retake a 30% stake in its low-cost subsidiary Jetstar Pacific from Australia's Qantas and increase its holding to 98%.

Vietnam Airlines will hold a majority stake of Jetstar Pacific and then restructure it. Photo: Vietnam Airlines.

Vietnam Airlines (VNA) announced on June 15 that the carrier and Qantas have agreed to introduce changes to Jetstar Pacific with the aim of improving the low-cost carrier's profitability.

Pending government and regulatory approval, the low-cost airline will return to its original brand, Pacific Airlines, and will feature a new logo and livery inspired by the colors and design of the Vietnam Airlines brand. Jetstar Pacific will officially operate under the Pacific Airlines brand after receiving approval by local authorities, according to VNA.

The airline will also change its reservation system from Navitaire to Sabre, to allow the low-cost carrier to synchronize its bookings, network and customer functions with VNA.

After the changes, VNA and Pacific Airlines will continue to create a product range to meet the diverse needs of customers from the low-cost to high-end segment.

Restructuring Jetstar Pacific

Currently, VNA and Qantas continue to review the low-cost carrier’s structure and future shareholding arrangements. 

Vietnam Airlines' Executive Vice President and Pacific Airlines President Trinh Hong Quang said at a recent event that low-cost airlines saw spectacular growth with a market share of 30-40% of total global volume in 2009- 2019, VnExpress reported.

In 2019, the Vietnamese aviation industry served a total of 72 million passengers, including 36 million by the low-cost carriers. “Jetstar’s capacity is too small compared to our expected capacity,” Quang explained. 

Meanwhile, its management mechanism was mainly based on Qantas, whose reservation system is located in Melbourne, Australia and not in Vietnam. "The domestic market is very important to Jetstar," he said. "Therefore, we are making changes to the organizational structure and operation of Jetstar."

The low-cost airline will play a role in supporting the resumption of air travel as restrictions are loosened. By streamlining functions, Pacific Airlines could remain competitive, inherit the efficiencies of VNA, and continue to offer low airfares to its customers, Quang said.

“We are optimistic that the dual brand strategy will leverage the brand and resources of VNA, through innovation and improvisation,” he added. “The change would unlock economy of scale and help the industry to embark on a post Covid-19 recovery.”