The new airline will be named VASCO and has a minimum charter capital of 300 billion Vietnamese dong (US$13.43 million) and about 10 airplanes.

Vietnam Airlines will hold 51 per cent of the venture, while the Vietnam Technological and Commercial Joint Stock Banks (Techcombank) will have a 49 per cent stake.

As soon as the airline is established, Techcombank will make an initial investment of VND147 billion, while Vietnam Airlines will provide aircraft and other assets worth about VND157 billion.

Vietnam Airlines said the assets will be valued by the Vietnam Valuation and Finance Consultancy Jsc (VVFC) under the Ministry of Finance.

A representative from Techcombank will be appointed as VASCO’s chairman, while the Chief Executive Officer of VASCO will be from Vietnam Airlines.

In its first stages, VASCO will continue to operate ATR72 aircrafts on domestic routes not capable of handling jet airplanes, such as to Con Dao, Cà Mau, Rach Gia and Dien Bien.

The move comes as Vietnam Airlines continues to lose its domestic market share to the low-cost VietJet Aviation Joint Stock Co Currently, Vietnam Airlines also holds 70 per cent of stake in another low-cost carrier, Jetstar Pacific Airlines.

According to the International Air Transport Association, Vietnam is expected to become one of the world’s top 10 fastest growing aviation markets in the next two decades.