Jetstar Pacific to cut flights to Vietnam's Nha Trang

HANOI Fri Aug 15, 2008 9:41pm EDT

HANOI Aug 16 (Reuters) - Vietnam's second-largest airline Jetstar Pacific, 18-percent owned by Australia's Qantas (QAN.AX) Airways Ltd, said it will drop flights to the central beach city of Nha Trang from next month due to rising fuel costs.

Instead, the unlisted airline would open three flights in late October and early November to link Ho Chi Minh City, Vietnam's commercial centre, with Bangkok, Cambodia's Siem Reap and Singapore, it said in a statement.

Oil CLc1 fell 1.1 percent to settle at $113.77 a barrel on Friday, but it still well above the $70 level used by Jetstar Pacific, Vietnam's only low-cost airline, to build its operation plans last year.

Flights to Nha Trang will cease from Sept 5. The route opened in June.

Fuel accounts for 60 percent of Jetstar Pacific's flight costs, Deputy CEO Nguyen Thi Thuy Binh said.

"Building a new business plan will focus on prioritising to tap the routes on which travel demand is high, so that would help the airline ease the financial impact from fuel prices," Binh said in the statement.

Nha Trang is a popular beach resort in central Vietnam, 450 km (280 miles) north of Ho Chi Minh City.

National flag carrier Vietnam Airlines said it has started collecting a fuel surchage of up to 180,000 dong ($11) on one-way ticket for domestic flights as from Friday as a measure to cope with the rising fuel cost.

The airline said in July it made a loss of $5 million during the first half of this year after high oil prices forced it to spend more than its revenue.

Jetstar Pacific said it will gradually shift its fleet with Boeing (BA.N) 737-400 aircraft to fuel-saving Airbus EAD.PA planes under a plan to have 30 A320s by 2014, the first of which will be delivered late this month or in early September.

Qantas, which owns low-cost Jetstar airline, bought a 18 percent stake in Vietnam's Pacific Airlines last year and said it will increase its holding to 30 percent by 2010. Pacific Airlines renamed itself to Jetstar Pacific after the share sales. ($1=16,497 dong) (Reporting by Ho Binh Minh; Editing by Kim Coghill)