Ideology clash as Jetstar Pacific chief quits

[Greg McDonald]

From NEWS.COM.AU:

JETSTAR Pacific, the Vietnamese arm of Australia's budget airline brand, has lost its chief executive, leaving Qantas to deal with emerging ideological differences with the nation's Communist Government.
The move is a major setback for the Australian carrier, which is under orders from the Vietnamese Transport Ministry to strip the Jetstar name and distinctive orange branding off the six-jet fleet by October because it is "too Australian".
Yesterday, Qantas would not reveal why Luong Hoai Nam, who was appointed by the Communist Party five years ago, suddenly quit the airline without notice, the Herald Sun reports.


A source said the move was for "cultural reasons".

The Herald Sun believes the problem confronting Qantas, which bought into the business two years ago to snare valuable traffic rights, is it is caught in a battle between competing Communist ideologies.

Party pragmatists, including Prime Minister Nguyen Tan Dung, want to encourage global franchise agreements to promote economic development, while old-style hardliners seek to defeat Western-style capitalism.

Meanwhile, Qantas, which holds 27 per cent of the Vietnamese brand, is treading carefully in dealing with the country's leadership.

Jetstar's Australian chief Bruce Buchanan made a recent hurried trip to Hanoi where he made it clear to the Transport Ministry that the Jetstar brand and its integration with the wider Qantas and Jetstar groups was defined in binding legal agreements.

"Jetstar Australia and the Qantas Group has always understood the association of the Jetstar brand within Vietnam, which has been fundamental to the transformation of the former Pacific Airlines, was approved and deemed legal by the Vietnamese Government," he said.

Mr Buchanan said cross-border branding was standard international practice, and one that already had precedence in Vietnam and in the Asia-Pacific aviation industry.

Qantas has injected $50 million into Jetstar Pacific and, until the onset of the latest troubles, planned to lift its stake to 30 per cent next October.

After more than two years of corporate cost-cutting overseen by Qantas and Jetstar advisers, Jetstar Pacific turned a profit for the first time in July.

Passenger numbers have since grown by 43 per cent while other airlines struggle to generate traffic.

Present issues are not the first that Qantas and Jetstar have encountered.

Last year Mr Dung had to intervene when supplies of jet kerosene were suddenly cut off when tankers refuelling Jetstar Pacific's fleet were withdrawn without notice by Government-controlled Vietnam Airlines.

Jetstar Pacific flies to seven Vietnam cities but the Qantas deal allows it to share valuable air traffic rights to Europe so Ho Chi Minh City could be used as a refuelling hub for future services from Australia.

[Philip Argy]

Col Bainimarana could pull a stunt like this next, although hopefully he realises what a disaster that woud be for his economy - something Vietnam sems oblivious to.