[Reading level: B2 – Upper Intermediate]
Almost three decades after its establishment, Jetstar Pacific struggles to be profitable in Vietnam’s increasingly crowded aviation market.
Chairman of the budget carrier, Trinh Hong Quang, said recently that it has not been able to make a breakthrough despite operating for 29 years. The company has only reported profits for four years.
Jetstar Pacific, originally named Pacific Airlines, was the first joint-stock airline established in Vietnam, in 1991, after the country allowed foreign investment in domestic carriers.
The government then owned 86.49 percent of Pacific Airlines via the Civil Aviation Authority of Vietnam (CAAV), with the rest belonging to two domestic private firms.
When the CAAV established Vietnam Airlines in 1993, it transferred all its stake in Pacific Airlines to the national flag carrier.
In 2006, the government transferred the 86.49 percent stake in Pacific Airlines to the State Capital Investment Corporation (SCIC), a state-owned company tasked with utilizing state funds. The airline had yet to turn a profit then.
A year later, Australia’s Qantas bought an 18 percent stake in the airline. Its name was then changed to Jetstar Pacific and it became the first low cost airline in Vietnam.
Despite expectations that a foreign investor would transform the business, Jetstar Pacific teetered on the brink. By the end of 2007, it reported an accumulated loss of nearly $55 million.
To save the airline, the government had to sell additional shares to Qantas, increasing its stake to 31 percent of the airline. Jetstar Pacific reported its first profit in July 2009, but made losses for the whole year.
By 2012, the airline’s accumulated loss doubled from five years earlier to VND2.4 trillion ($104 million). That year, SCIC transferred all its stake in the airline back to Vietnam Airlines.
Jetstar Pacific posted its first annual profit in 2014 at VND8 billion ($343,300), which rose to VND112 billion ($4.8 million) the following year before plummeting to losses in 2016 and 2017.
At the end of 2017, it had accumulated losses of VND4 trillion ($162 million). At this time, Vietnam Airlines owned nearly 70 percent of Jetstar Pacific, while Qantas owned 30 percent.
By expanding its fleet and lowering costs, the airline posted its highest profit ever in the first nine months of 2019 at VND205 billion ($8.8 million).
With the Covid-19 pandemic cancelling flights for months, the carrier estimates a record-high loss of VND1.2 trillion ($51 million) this year.
It is at this juncture that Qantas is set to divest its stake in the carrier, selling it to Vietnam Airlines.
Chairman Quang, who is also a deputy CEO of Vietnam Airlines, said that there were differences in management style between Australian private company Qantas and state-owned Vietnam Airlines, and the former does not understand the Vietnam market, which is crucial for the budget carrier.
The small fleet of 18 jets is another reason for the airline’s lackluster performance, Quang said, adding that the airline plans to strengthen it to 30-40 in upcoming years. Its competitor Vietjet had 78 aircraft by the end of last year and wants to bring this number to 200 by 2025.
Quang said Vietnam Airlines will buy back Qantas’s to own 98 percent of the airline, which will once again be called Pacific Airlines.
Industry insiders say that even with a new restructuring plan, Pacific Airlines will still face challenges with Vietjet having secured 41.9 percent of the domestic market. They note that even leading low-cost carrier AirAsia last year abandoned its plans to launch a joint venture in Vietnam following three failed attempts.
With two more carriers, Vietravel Airlines and KiteAir, waiting in the wings, local competition is set to intensify further.
Vietnamese airlines served 116 million passengers last year, up 12 percent from 2018, according to the Airports Corporation of Vietnam.
struggle to do sth /ˈstrʌɡ.əl/ [B2] (v): vật lộn làm gì
profitable /ˈprɒf.ɪ.tə.bəl/ [B2] (adj): có lãi
aviation /ˌeɪ.viˈeɪ.ʃən/ (n): hàng không
budget carrier /ˈbʌdʒ.ɪt ˈkær.i.ər/ (n): hãng hàng không giá rẻ
breakthrough /ˈbreɪk.θruː/ [B2] (n): bước đột phá
stake /steɪk/ (n): cổ phần
national flag carrier /ˈnæʃ.ən.əl flæɡ ˈkær.i.ər/ (n): hãng hàng không quốc gia
state-owned (adj): thuộc về nhà nước
utilize /ˈjuː.təl.aɪz/ (v): sử dụng
teeter /ˈtiː.tər/ (v): chênh vênh
on the brink of sth [C2] (pre): trên bờ vực …
accumulated loss /əˈkjuː.mjə.leɪ.tɪd lɒs/ (business terms): lỗ lũy kế
plummet /ˈplʌm.ɪt/ (v): trượt dốc
fleet /fliːt/ [C1] (n): đội bay
at this juncture /ˈdʒʌŋk.tʃər/ (adv): tại thời điểm này
be set to do sth (v): được cho là sẽ làm gì
divest /daɪˈvest/ (v): thoái vốn
the former (pronoun): thứ được nói tới trước
lackluster /ˈlækˌlʌs.tɚ/ (adj): mờ nhạt
upcoming /ˈʌpˌkʌm.ɪŋ/ [C1] (adj): sắp tới
industry insider /ˈɪn.də.stri ɪnˈsaɪ.dər/ (n): người trong ngành
intensify /ɪnˈten.sɪ.faɪ/ [C2] (v): tăng cường
ỦNG HỘ READ TO LEAD!
Chào bạn! Có thể bạn chưa biết, Read to Lead là một trang giáo dục phi lợi nhuận với mục đích góp phần phát triển cộng đồng người học tiếng Anh tại Việt Nam. Chúng tôi không yêu cầu người đọc phải trả bất kỳ chi phí nào để sử dụng các sản phẩm của mình để mọi người đều có cơ hội học tập tốt hơn. Tuy nhiên, nếu bạn có thể, chúng tôi mong nhận được sự hỗ trợ tài chính từ bạn để duy trì hoạt động của trang và phát triển các sản phẩm mới.
Bạn có thể ủng hộ chúng tôi qua 1 trong 2 cách dưới đây.
– Cách 1: Chuyển tiền qua tài khoản Momo.
Số điện thoại 0947.886.865 (Chủ tài khoản: Nguyễn Tiến Trung)
Nội dung chuyển tiền: Ủng hộ Read to Lead
– Cách 2: Chuyển tiền qua tài khoản ngân hàng.
Ngân hàng VIB chi nhánh Hải Phòng
Số tài khoản: 012704060048394 (Chủ tài khoản: Nguyễn Tiến Trung)
Nội dung chuyển tiền: Ủng hộ Read to Lead