Upstart VietJet Wants to Become 'Emirates of Asia'

by Josh Lew
Last updated: 11:30 AM ET, Wed March 9, 2016

Photo courtesy of VietJet

VietJet has been in the news over the past few years for rapidly achieving success in domestic and regional markets and for its racy advertising photo shoots and pre-flight bikini fashion shows.

Thus far, the brash young carrier has proven that it can punch above its weight class. However, apparently it has designs on doing much more than providing strong domestic competition for flag carrier Vietnam Airlines and strong regional competition for the likes of AirAsia. It wants to be a major global player in the industry.

Going public, going global

The airline's ownership, VietJet Aviation Joint Stock Co., wants to hold an initial public offering as early as the second quarter of this year. The reason for going public so quickly is to help fund a major expansion that will include more regional routes as well as the launching of international long haul service.

The details of the IPO have not yet been finalized, but the airline could offer as much as 30 percent of its stock to the public.

Trying to emulate one of the world's best airlines

CEO Nguyen Thi Phuong Thao says that her airline wants to emulate Emirates: "We plan to make VietJet a global airline. We look at Emirates, which came from a country with a small population and has become a global airline. We want to make VietJet the Emirates of Asia."

That is a pretty ambitious goal, even considering VietJet's impressive financial success. The airline's revenue rose by more than 200 percent in 2015. It expects a 100 percent revenue increase this year as well. Given its low cost business model, perhaps the Asian upstart would be better off first comparing itself to another successful long-haul low-cost airline, Norwegian Air Shuttle, instead of global superpower Emirates.

Significant interest in an IPO

VietJet is projected to surpass flag carrier Vietnam Airlines in terms of domestic market share this year or next year. It is also well positioned in the region and is planning to add more flights to places like Singapore, Japan and South Korea in the coming months.

Flights to the Americas or Europe will require new planes and will expose the airline to a part of the industry that is not always kind to newcomers.

That said, the IPO should attract a lot of attention because major investment funds from around the world are looking to get into the Vietnamese market as it starts to show signs of significant growth. Investing in a profitable airline is certainly a good way to get some low risk exposure to the market.

The airline's recent profit numbers make it likely that its initial stock price will be reasonably high. VietJet is seeking a $1 billion valuation for its IPO.

For the latest travel news, updates and deals, subscribe to the daily TravelPulse newsletter.