As early as mid-2016, Vietnam Airlines (VNA) will have its first foreign stakeholder.
The national carrier, which is 95% state-owned, has just confirmed that All Nippon Air (ANA) will acquire an 8.8% stake in VNA by the summer, reports theNikkei Asian Review.
The deal, which will cost 13 billion yen (US$109 million), includes a code-sharing agreement and will see the two airlines partner on perks, such as mileage rewards systems. These changes could go into effect as early as October 2016.
Once the deal becomes official, according to Bloomberg, ANA will have a seat on VNA's board and will also provide insight to the national carrier's managerial and operational teams. This is a first for both airlines: ANA is set to become VNA's first foreign stakeholder, while VNA will be ANA's first investment in a foreign carrier.
Though it's uncharted territory for the two parties, the deal makes sense on a few levels. For the Vietnamese government, which is trying to reform its larger state-owned enterprises, ANA's involvement will usher in a new era of improved customer service as well as capitalizing on ANA's flight connections to Europe and North America, an asset which only promises to become more important as the Trans-Pacific Partnership comes into play.
“We chose ANA since they’re a big, prestigious airline with a large market that does not compete with ours,” VNA CEO Pham Ngoc Minh tells Bloomberg. “ANA’s experience and strengths will help Vietnam Airlines expand.”
On ANA's side, travel from Vietnam to Japan has quadrupled in the last five years, making the country's national carrier an obvious choice for foreign investment. With a fast-growing aviation market, Vietnam presents a viable opportunity for ANA to get ahead of its competitor, Japan Airlines, before the latter's growth restriction ban is lifted in 2017, reports the Financial Times.
As of December, VNA operates 29 international routes as well as 21 domestic ones. The airline currently has a code-share agreement with Japan Airlines, however this will likely dissolve once ANA steps in.
[Photo via Flickr user Daihyun Ji]
