Qantas throttles up in Vietnam

The executives, Daniela Marsilli and Tristan Freeman, returned to Sydney yesterday after Vietnamese authorities "terminated" an investigation into $US31 million ($A36.5 million) in fuel-hedging losses at Jetstar Pacific in 2008. Qantas jointly owns the airline with the government-owned State Capital Investment Corporation.

But the episode has raised speculation about whether Qantas will retain its $50 million-plus investment in Jetstar Pacific. The Vietnamese airline has encountered hurdles at almost every turn over the past year, including a push from the powerful Ministry of Transport to have the airline dump its Jetstar logo.

But Qantas's corporate affairs chief, David Epstein, said the airline was confident about its investment in Vietnam and would be increasing its stake to 30 per cent, the maximum limit for foreign interests. "If we had concerns about our continued investment we would not be there," he said. Vietnam has a history of detaining foreigners for loss of state funds. Dutch bank ABN Amro paid $US4.5 million for the release of four employees jailed or under house arrest in 2006.

Asked whether Qantas had to pay for its executives' release, Mr Epstein said: "Absolutely not. We would never have done that and it is illegal under Australian law."

Under an agreement reached when it first invested in Jetstar Pacific, Qantas has an option to sell its entire $50 million investment back to the Vietnamese at the same price it paid for it.

Mr Epstein said the put option was extended last month, but Qantas did not plan to exercise it.

Industry insiders said the strategic rationale for Qantas retaining its investment in Jetstar Pacific was gone. Part of Qantas's rationale for the push into Vietnam was based on a potentially lucrative domestic market in a country of almost 86 million people. Qantas also eyed Ho Chi Minh City as a hub for long-haul Jetstar flights to Europe as the city was a cheaper alternative to Singapore or Bangkok.

However, the Vietnamese government's cap on fares has made it difficult to realise the domestic market's potential.