VietNamNet Bridge - Vietnam Airlines plans to restructure its subsidiary - the Vietnam Air Services Company (VASCO) - to establish a new airline offering short flights.

In an interview with Bloomberg, Pham Ngoc Minh, General Director of Vietnam Airlines, said the airline had submitted the plan to the Ministry of Transport.

Under the proposal, Vietnam Airlines will establish a joint venture company with charter capital of VND300 billion (nearly $15 million). The national carrier will hold 51% of the capital and the remaining 49% will belong to the Vietnam Technological & Commercial Joint Stock Bank (Techcombank).

Techcombank will pour initial capital of about VND147 billion (about $7 million), while Vietnam Airlines will provide aircraft and other assets belonging to Vasco, Minh told Bloomberg.

If the transport ministry gives the nod to the plan of Vietnam Airlines and Techcombank, the new firm would be able to operate from the second quarter of this year and the five aircraft will continue to fly on the current routes.  

Vietnam Airlines hoped that the new company will be profitable in the first year of operation and its profit will rise steadily in the following years. Its revenue is estimated at some VND2 trillion in the 2016-2018 period.  

Techcombank is a shareholder of the parent firm of Vietnam Airlines, holding 25.76 million shares (1.82%) after the corporation’s initial public offering (IPO) auction in November 2014.   

VASCO said on its website that it currently operates ATR72 aircraft configured with 65 seats for scheduled flights between HCMC and southern airports in Ca Mau, Con Dao, Phu Quoc, Rach Gia and Can Tho.

The carrier conducts freight flights as well as offers consulting and maintenance services for small aircraft of individuals and organizations in Vietnam and related services.

Vietnam Airlines is losing domestic market share to low-cost carrier VietJet Air. According to analysts from CAPA Centre for Aviation, VietJet might surpass Vietnam Airlines for domestic market share this year.

Currently, Vietnam Airlines owns a 70% stake in the low-cost carrier Jetstar Pacific, and the remaining 30% belongs to Qantas Airways (Australia).

Vietnam's aviation market is projected to be among the 10 fastest-growing aviation markets in the world in the next two decades, according to the International Air Transport Association (IATA).

NCDT/SGT