jetstar_pacificMATT O’SULLIVAN

QANTAS expects the investigation into its Vietnamese joint venture, Jetstar Pacific, to run for months. It emerged that the interrogation of its two Australian executives is the latest in a string of concerns raised by authorities recently.

It has stoked suspicions that at least part of the communist-led Vietnamese Government opposes Qantas’s investment in the country’s second biggest airline.

However, it is understood that a clause in Qantas’s original contract in 2007 to buy into what was then Pacific Airlines could limit the financial impact on the Australian airline if it chooses to walk away from Vietnam.

The latest investigation comes after Vietnamese authorities began an inquiry into Jetstar Pacific’s maintenance practices in November. It was sparked by two former engineers, Bernard McCune and Digger King, raising concerns but found only minor problems.

That same month Vietnam’s Transport Ministry said the Jetstar brand did not conform to the country’s laws. Qantas remains in talks about the use of the star logo and may have to make changes to the branding by October.

Sources said the latest investigation into $31 million in fuel hedging losses at Jetstar Pacific in 2008 was ”going to take months, not weeks”. Qantas has largely been kept in the dark by Vietnamese authorities about the investigation.

The chief financial officer of Jetstar Pacific, Tristan Freeman, and its chief operating officer, Daniela Marsilli, have been barred from leaving Vietnam since December 19 while they face questioning in Ho Chi Minh City.

On Thursday Jetstar Pacific’s former chief executive, Luong Hoai Nam, was arrested over allegations he caused serious losses.

Qantas has insisted it remains committed to Vietnam but at the very least it will have to consider whether to raise its stake in Jetstar Pacific from 27 to 30 per cent.

Sources said the airline appeared to be caught between two ideologies in Vietnam: a pro-liberalisation agenda pushed by several senior ministers and those who oppose the pace and extent of the reform.

”When you go and play in Asia you need to know the rules,” the president of the Australian and International Pilots Association, Barry Jackson, said yesterday.

But he believed Qantas would stay committed to Vietnam because it had the potential to become a large travel market. ”They will continue to forge the relationship. They need to make it work, and they may need to modify some things.”

Vietnam has been a key element in Qantas’s Asian expansion plans because it is a booming tourist destination and is close to China.

Ho Chi Minh City is also regarded as a potential hub for Jetstar flights between Australia and Europe.