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As VietJet Charges Ahead, Jetstar Pacific Is Trying to Catch up

With the ink barely dried on VietJet's US$11.3 billion deal to purchase 100 Boeing aircraft, things are heating up in the competition between Vietnam's budget airlines.

Last week, VietJet CEO Nguyen Thi Phuong Thao's name made it onto the Forbes list of the 100 most powerful women in the world. Coming in at number 62, Thao is expected to become Vietnam's next billionaire following the airline's forthcoming IPO. However while Thao and VietJet are charging ahead with the ambitious goal of becoming the “Emirates of Asia”, Jetstar Pacific may finally start giving Vietnam's newest budget airline a run for its money. 

Last month, low-cost carrier Jetstar Pacific received a US$139 million investment from Vietnam Airlines and Qantas, reports Vietnam Investment Review. The cash infusion, which comes after Jetstar Pacific posted accumulated losses of US$151.9 million, will allow the carrier to more than double its fleet to 30 aircraft over the next four years.

Jetstar Pacific currently has 12 airplanes which operate 23 domestic and international routes; by 2020, the airline hopes to add another 18 aircraft to its fleet. Though it's unclear where these additional planes will come from, Vietnam Airlines will contribute US$97 million to Jetstar Pacific's cause, while Qantas will put forward US$42 million.

The move is meant to put the carrier in competition with VietJet, whose business has ballooned since its founding in 2011.

According to the CAPA Center for Aviation, VietJet now holds 40% of the domestic low-fare market. If business continues as usual, the aviation market research firm expects VietJet to surpass Vietnam Airlines as the country's largest domestic carrier before the year is out.

Though Jetstar Pacific has struggled to keep pace with its competitor, the airline expanded by nearly 40% last year and is expected to focus on international growth in second half of 2016.

It remains to be seen how these changes will affect the average consumer, but the competition between budget carriers signals healthy growth in Vietnam's aviation industry.

[Photos via Flickr users Blue Stahli Luân and lkarasawa]

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