Prospects of a new domestic Australian airline have been thrown into doubt after Vietnamese low-cost carrier Vietjet was hit with a worldwide asset freeze over an unpaid $360 million aircraft leasing debt, reports aviation writer SCOTT MAYMAN.

Vietjet has been making moves to establish an Australian domestic subsidiary, potentially offering services to Canberra, but the British High Court ruling has raised questions about whether those plans will proceed.

The airline is being pursued by aircraft leasing company FW Aviation, controlled by FitzWalter Capital, over debts dating back to 2021 involving four Airbus A321 aircraft.

On October 15, the court granted a worldwide freezing order against Vietjet after finding there was a risk the airline could move assets beyond the reach of creditors.

The court heard that Vietjet had paid just $US2 million of a judgment debt exceeding $US250 million.

In his ruling, Justice Pushpinder Singh Saini described Vietjet as a “won’t pay” debtor rather than one unable to pay.

The court also examined arrangements involving a Cayman Islands company, Angelica Holding Limited, and valuable rights associated with Vietjet’s order book of about 300 Airbus and Boeing aircraft.

Vietjet maintained the arrangements were legitimate business transactions, but the judge found sufficient evidence of a risk that assets could be dissipated to justify the freezing order.

Vietjet confirmed at the time that the aircraft was being leased to an Australian entity seeking regulatory approval to operate locally.

The airline has also reportedly applied to the Civil Aviation Safety Authority for an air operator’s certificate to establish a domestic operation.

Vietjet has also been expanding its international Australian network, including plans for services from Western Sydney International Airport to Ho Chi Minh City and Bangkok.

Its difficulties come as two other prospective domestic carriers, Koala Airlines and Zinc Airlines, pursue plans to enter the Australian aviation market.

Neither Vietjet nor its proposed Australian subsidiary has confirmed whether Canberra would be included in any future domestic network.