Vietjet Expands to Central Asia With New Kazakh Joint Venture
Vietjet's new Kazakh venture signals a quiet reshaping of air travel in Central Asia, where low-cost carriers have only started to scratch the surface.
Vietnam's fastest-growing airline has announced a major new joint venture in Kazakhstan. The partnership with Qazaq Air will create a new airline brand known as Vietjet Qazaqstan.
The deal represents only the second agreement of its kind after the creation of Vietjet Thailand in 2014.
The project was announced during a tour of the Central Asian country by To Lam, general secretary of Vietnam's Communist Party. The timing — coinciding with a formal state visit — underscores how aviation can be used as a tool of soft power and economic diplomacy.
In a joint statement, the companies confirmed that the new airline will operate a fleet of at least 20 Boeing 737 planes. They said this will enable 'strong expansion of its domestic and international route network,' without disclosing specific cities to be served.
What's the Goal?
There are currently no scheduled nonstop passenger flights between the two countries. The distance between the capitals of Vietnam and Kazakhstan is approximately 2,000 nautical miles. This is comfortably within the range of the Boeing 737 Max 8 or similar variants.
The vision for the new venture is to become, 'a strategic air bridge connecting Kazakhstan with Vietnam, Southeast Asia, and global aviation hubs.'
Kazakhstan may not be the most obvious next stop for a Vietnamese airline known for beach routes and Southeast Asia hubs, but that's part of the appeal.
The new venture is a soft launchpad into untapped markets in Eurasia, where demand is rising but low-cost options remain relatively sparse. Kazakhstan alone is the world's ninth largest country, with a population of more than 20 million people.
Strategic Questions Remain
The planned deployment of more than 20 Boeing 737s will mark a major scale-up of Qazaq Air. It is currently a regional carrier operating a small fleet of turboprop aircraft.
The new venture will 'build on the existing Qazaq Air platform,' but it remains unclear if Qazaq Air will be absorbed into the new brand or operate alongside it.
Vietnam's Ministry of Finance granted a foreign investment registration certificate to Aviation Holdings, a subsidiary of Vietjet. This authorized the acquisition of a strategic equity stake in Qazaq Air.
No timeline was given Tuesday for the first flights or required regulatory approvals. Financial terms for the transaction were not publicly available.
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An Untapped Asset?
While nearly a dozen foreign low-cost airlines now fly to Kazakhstan, the country has just one homegrown budget carrier: FlyArystan. The creation of Vietjet Qazaqstan is likely to bring significant competition to the company, which is a no-frills subsidiary of the national airline, Air Astana.
In recent years, Kazakhstan has emerged as a strategic location for international investment. Its proximity to China, Russia, the Middle East, and major emerging markets has piqued the interest of overseas investors. The country is also rich in rare minerals and other natural resources.
Last week, Skift reported on data from Trip.com Group. It highlighted Kazakhstan among countries that are gaining traction with outbound Chinese visitors.
The rise of Vietnam's travel sector is likely to be a talking point at next week's Skift Asia Forum. There are just a handful of tickets left for the event in Bangkok on May 14-15. Select an option below to secure your place:
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What am I looking at? The performance of airline sector stocks within the ST200. The index includes companies publicly traded across global markets including network carriers, low-cost carriers, and other related companies.
The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than a trillion dollars into a single number. See more airlines sector financial performance.
Read the full methodology behind the Skift Travel 200.
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