(Reuters) - Malaysia’s AirAsia Group cancelled plans to enter Vietnam’s crowded aviation market on Wednesday, but said it was still keen on operating a low-cost carrier in the country.
The Malaysian budget airline, in a statement, said it had ended its agreement with Gumin Company Ltd and Hai Au Aviation to set up a low-cost carrier in a pact signed in March 2017.
AirAsia had planned for the venture to start services in Vietnam by August this year.
Vietnam is one of Asia’s fastest growing economies and air travel is booming, with domestic and inbound passenger numbers rising at double-digit rates last year.
AirAsia, which swung into the red in the fourth quarter of 2018 for the first time in more than three years, said it “remains interested in operating a low-cost airline in Vietnam due to its favourable geographical location, expanding aviation market and overall growth potential”.
Following the launch of a fifth Vietnamese airline in January, competition has become intense and is straining the country’s aviation infrastructure.
AirAsia already has offshoots in Indonesia, Thailand, India, Japan and the Philippines.
Reporting by Shanima A in Bengaluru and Jamie Freed in Singapore; Editing by Susan Fenton