Pacific Airlines’ plane count was reduced to zero last week as the airline owed $200 million to leasing companies and struggled to pay back.
Pacific Airlines has announced that it will lease three planes from its parent company Vietnam Airlines for the time being.
Established in 1991 as a state-owned enterprise in which the government held an 86.5% stake, it was restructured in 1993 and became a subsidiary of Vietnam Airlines.
In 2006, the government handed over the airline to the State Capital Investment Corporation (SCIC), a sovereign wealth fund created to also manage state-owned enterprises.
In 2007, SCIC sold an 18% stake to Australian airline Qantas and the carrier was renamed Jetstar Pacific.
But then it was on the verge of bankruptcy. In 2008, the government agreed to sell more shares to Qantas to help the Pacific recover.
Its financial situation began to improve and it even recorded its first quarterly profit in 2009.
But violations related to maintenance and safety monitoring sparked controversy, and the Department of Transportation even had to issue a public statement ensuring people could travel safely on Jetstar Pacific.
In 2012, SCIC returned part of its stake to Vietnam Airlines.
In 2020, Qantas sold its holdings and the airline’s name reverted to Pacific Airlines.
Although Vietnam Airlines planned at the time to expand the Pacific Airlines fleet to 40 aircraft, it was never able to achieve this goal. At its peak, the Pacific had 20.
His financial situation never improved. In more than three decades, Pacific Airlines has only made four times its profits, the highest being VND112 billion in 2015.
After the Covid-19 pandemic, the difficulties have worsened. Between 2020 and 2022, it recorded losses of more than 2 trillion VND every year.
Nguyen Hai Quang, director of the Faculty of Business Management at the University of Economics and Law of Vietnam National University in HCMC and former professor at the Aviation Academy, said Pacific Airlines has experienced difficulties all these years due to lack of financial resources.
The airline is hamstrung by rigid mechanisms typical of state-owned companies, he said.
At the same time, its competitor Vietjet Air is experiencing rapid expansion.
Established almost two decades after Pacific Airlines, Vietjet now operates 86 jets on 125 domestic and international routes.
The low-cost market is now dominated by Vietjet as Vietravel Airline, the latest carrier to join the aviation market, only has three jets while Bamboo Airways is restructuring.
Quang said that in the short term, Pacific Airlines’ fleet shortage would not disrupt the aviation industry since domestic demand is currently weak.
Vietnam Airlines still has two months before summer, the peak travel season, to lease planes, he added. Vietnam Airlines said it was looking for new suitors for Pacific Airlines.
Pacific Airlines operates ground services at three major airports, Hanoi, Da Nang and HCMC, making it more attractive to investors than Vietravel Airlines, also on the prowl.
Pacific Airlines also has prime time flight slots at major airports.
