Cloud over Vietnam operation

Vietnamese economic police arrested Jetstar Pacific’s former chief executive, Luong Hoai Nam, in December, then banned Qantas employees Tristan Freeman, Jetstar Pacific’s chief financial officer, and its chief operating officer, Daniela Marsilli, from leaving Vietnam. They were being questioned about the circumstances surrounding the hedging losses, but neither has been charged with any offence.

Jetstar Pacific is a key element in Qantas’s low-cost Asia-Pacific strategy and Vietnam is its second LCC hub in the region after Singapore.

Qantas has a 27% stake in Jetstar Pacific after initially taking an 18% investment in July 2007. The remainder is owned by the government-owned State Capital Investment Corporation, the Saigon Tourist Company and Luong.

Luong was appointed to the top job in Jetstar Pacific five years ago (it was then Pacific Airlines, a subsidiary of government-owned Vietnam Airlines) by the Communist Party. He resigned suddenly in November and has been accused of “being irresponsible” and “causing serious losses”.

Qantas group chief executive, Alan Joyce, told Orient Aviation: “My top priority is my people.” He said Freeman and Marsilli had done “nothing wrong” and many airlines around the world had suffered hedging losses in 2008, most of them far greater than Pacific Airlines.

In response to suggestions authorities had acted because Jetstar Pacific was increasingly taking market share from Vietnam Airlines, Joyce said there were “probably a lot of different complex issues, which has made our life more difficult”.

“We believe the Vietnamese market will benefit from two strong carriers. This is going to happen anyway with the Vietnamese market over time,” said Joyce.

He added that Jetstar Pacific was now seeing the first profit in its history. “It’s on-time performance, which was pretty bad in Vietnam at 60%, is getting into the 80%s consistently, which is a big turnaround. Its market share has risen from 17% to 24% and is getting closer to 27% in the domestic Vietnamese market,” he said.

“The airline has a great foundation. Vietnam is a market of 90 million people and it’s a market that has huge potential for us.”

However, the priority is to solve the current diplomatic impasse. “We want this resolved so we can look at where we take the business longer term,” said Joyce.