Pacific Airlines, a low-cost subsidiary of Vietnamese national carrier Vietnam Airlines is to suspend operations to undergo an urgent restructuring process. The loss-making carrier is to use the hiatus in operations to reevaluate its current fleet and route structure to “ensure operational efficiency” according to the airline.
The airline has faced operational difficulties for several years. In 2022, the company incurred a loss of nearly VNĐ2.1 trillion (US$84.5 million) due to the impact of the COVID-19 pandemic and has struggled to return to profitability in the period since.
In a process that started on March 18, 2024, the airline has warned passengers that many of its flights will be unavailable but that “new flight schedules will be assigned to ensure stable operation”. Under the plan, the carrier is expected to return its entire fleet of leased Airbus A320s to lessors.
It is believed that passengers will be reprotected onto flights operated by Pacific Airlines’ parent company Vietnam Airlines in the short term to provide some continuity of operations for affected passengers. Pacific Airlines has also said that any changes implemented will be “designed and carried out to protect customer rights and benefits.”
According to the airline, under the restructuring plan, Pacific Airlines will eventually lease aircraft from Vietnam Airlines to enhance its operational efficiency and optimize the usage of available resources within the Vietnam Airlines Group. With the two companies currently finalizing these arrangements, the leased aircraft are expected to arrive in the coming weeks.
In addition to the supply of aircraft, the restructured carrier will also receive support from Vietnam Airlines with the sharing of infrastructure and customer services, such as check-in counters and airport shuttles.
According to Đinh Việt Thắng, Director of Vietnam’s Civil Aviation Administration, Pacific Airlines will dry lease three aircraft from its parent company initially, although will supply its own crews, maintenance, and insurance when it recommences operations.
“This activity is necessary for Pacific Airlines to recover effectively, adapt to the new environment, and develop in the future,” he said.
An airline spokesperson told Vietnam News that “Enterprise restructuring is among the effective self-help solutions applied by many airlines around the world and in Vietnam to deal with the severe consequences of the COVID-19 pandemic.”
History/Background
Ho Chi Minh-based Pacific Airlines began operations in 1991, initially flying charter and cargo services. Between 1996 to 2005, the airline operated under the government-owned Vietnam Airlines Group umbrella before it came under the full control of Vietnam’s federal government. In 2007, the Vietnamese government sold a 30% shareholding to Australian carrier Qantas and in May 2008 the carrier rebranded as Jetstar Pacific.
In February 2012, Vietnam Airlines Group purchased a 70% stake in the company and in 2020, Qantas sold its remaining stake in Jetstar Pacific to the Vietnam Airlines Group and with that sale completed, the carrier returned to its former brand name of Pacific Airlines to operate as the budget arm of the national carrier.
According to ch-aviation, the carrier operates a fleet of eight leased A320s with an average age of 8.4 years and accommodating up to 186 passengers in a single-class configuration. The aircraft are leased from lessors Aviation Capital Group (five), Wings Capital Partners (two), and CALC (one).