Vietnamese VietJet has applied to launch an Australian domestic service

This is fantastic news and hopefully it can, pardon the pun, really take off. The prices airlines charge here in Australia, especially Qantas, are absolutely outrageous. This proposal could be one of the biggest changes to Australian aviation in years, but it’s important to separate what’s already happened from what’s still just on the table. 

What's happened so far: 

Vietnamese low-cost carrier VietJet has applied to launch domestic Australian services, making it the first serious new entrant to challenge the established airlines since the collapse of Bonza in 2024. The application is currently subject to Australian regulatory approvals.

If approved, VietJet would join a market currently dominated by:

• Qantas
• Jetstar
• Virgin Australia
• Rex (on its remaining regional services)

Why would VietJet do this?
Australia has some of the highest domestic airfares in the developed world, particularly on leisure routes.

VietJet has built its business in Asia around:

• very low operating costs
• high aircraft utilisation
• charging separately for extras like baggage, meals and seat selection
• stimulating demand with very low headline fares

The company appears to believe it can bring that model to Australia.

What aircraft would they likely use?
VietJet already operates:

• Airbus A320
• Airbus A321
• Airbus A330 (using this on international routes now)

For domestic Australia, aviation analysts expect the airline would mainly use the A321neo, which seats around 230 passengers and has the range to fly virtually any domestic route economically.

Likely first routes:
Nothing has been officially announced, but industry observers expect the first routes would be the busiest routes, known as the triangle route, such as:

• Melbourne–Sydney
• Melbourne–Brisbane
• Sydney–Brisbane

These routes already have strong demand and enough passenger volume for a low-cost carrier.

Could fares really fall?
Potentially yes.

When low-cost airlines enter busy markets, incumbents often respond with:

• sale fares
• increased capacity
• more frequent promotions

Even travelers who never fly the new entrant can sometimes benefit because competitors' lower prices.
However, Australia presents challenges that don't exist in Southeast Asia:

• high airport charges
• relatively expensive labour
• long stage lengths
• limited airport slots availability, especially in Sydney. (Although with the new Western Sydney Airport opening up and no curfew, slot times will not be an issue)
• smaller population spread over vast distances

Those factors make it harder to sustain ultra-cheap fares over the long term. 

The biggest hurdle:

The history of new Australian airlines isn't encouraging.
Recent examples include:

• Bonza (collapsed in 2024)
• Tigerair Australia (closed in 2020)
• Compass Airlines (failed twice in the 1990s)

Each entered the market promising cheaper fares but struggled with profitability, competition and operational costs.

VietJet has one advantage those airlines largely lacked: it is already a profitable international airline with a fleet of more than 100 aircraft and an established business across Asia and Australia. That provides greater financial backing than many previous start-ups.

What needs to happen next?
Before domestic flights can begin, VietJet would need to:

• obtain Australian regulatory approvals
• establish an Australian operating structure
• secure aircraft and crews for domestic operations
• negotiate airport slots and ground handling
• announce routes and begin ticket sales

At this stage, no domestic routes have been announced, and no launch date has been confirmed. The airline has applied to enter the market, but approval and implementation are still ahead.

If VietJet is successful, it "could" become the most significant new competitor in Australian domestic aviation in more than a decade, with the greatest impact likely to be lower fares on the busiest east-coast routes.

VietJet Air is a Vietnamese low-cost airline headquartered in Ho Chi Minh City. It began commercial operations in 2011 as Vietnam's first privately owned airline and has expanded rapidly since then. 

Today it operates:

• More than 120 routes
• Around 420 daily flights
• Over 100 Airbus aircraft
• Services across Vietnam, Southeast Asia, Northeast Asia, India and Australia.