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Vietnam Airlines arm’s jet-fuel monopoly could end
Vietnam's Petrolimex Jet Fuel Joint Stock Co. and other firms have not been able to break down the monopoly of Vietnam Airlines' Vinapco in selling fuel to domestic airlines despite planning for years.
Vietnam Competition Council on April 14 fined Vinapco VND3 billion for unilaterally breaking a fuel supply contract with Jetstar Pacific Airlines (formerly Pacific Airlines) last year, forcing the budget carrier to cancel all flights on April 14, 2008.
Vinapco contracted to sell aircraft fuel to Vietnam Airlines and Jetstar Pacific Airlines at US$593 a ton when the global crude price was around $76.2 per barrel. When the oil price crossed $100, Vinapco raised its price to $750 a ton only for Jetstar Pacific and not for Vietnam Airlines, its parent.
The low-cost carrier rejected Vinapco’s demand and the latter ended the contract.
Vinapco was charged under antitrust laws.
The Council has asked the government to spin off Vinapco from Vietnam Airlines, keep an eye on its monopoly, and allow other firms to sell jet fuel to dismantle Vinapco’s monopoly.
This is good news for firms looking to enter this lucrative market but analysts warned it is not an easy task.
“To become a jet fuel supplier requires massive investment, including in land. There is not much vacant land near the HCMC airport and rents are high,” said Do Tat Binh, deputy general director of Southern Airports Corp.
VietNamNet, SGGP
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