Pacific Airlines, a subsidiary of Vietnam Airlines, will return to the skies today after a three-month hiatus. It has, however, shed its budget airline image adding business class, in flight entertainment, and checked baggage and meals included in ticket prices as standard.
Of note, aside from keeping Pacific Airlines’ aviation licence, which requires the airline to have aircraft, it’s not clear why Vietnam Airlines is keeping Pacific Airlines alive. As a budget carrier it made some sense as competition to Vietnam’s biggest budget carrier Vietjet. These recently announced upgrades to Pacific Airlines, however, look to put the carrier in the mid-range segment which would make it direct competition with its parent company.
While it may be easier to keep an unprofitable airline than to apply for another aviation licence down the track, Vietnam Airlines has been in financial distress for years now and there is little sign that will let up anytime soon. The company has been in negative equity for years, propped up by government loans it is currently trying to extend, an extension without which Bloomberg is reporting the airline could be insolvent by July. In this light, putting Pacific Airlines back in the air looks to be a questionable business decision.