VIETNAM: Viet aviation authorities turn down new carrier

The Civil Aviation Administration of Vietnam (CAAV) has asked the Transport Ministry not to approve a plan by Vietnam Airlines to establish an aviation joint stock company serving businesspeople, according to a Saigon Times report. The proposed VNJet airline was put forward by partners Vietnam Airlines, Hanoi Import-Export Joint Stock Company and the finance investment […]


The Civil Aviation Administration of Vietnam (CAAV) has asked the Transport Ministry not to approve a plan by Vietnam Airlines to establish an aviation joint stock company serving businesspeople, according to a Saigon Times report. The proposed VNJet airline was put forward by partners Vietnam Airlines, Hanoi Import-Export Joint Stock Company and the finance investment joint stock company An Binh. But CAAV asked the ministry not to approve VNJet’s establishment because the agency wanted Vietnam Airlines to concentrate resources on the plan for VietAir based on restructuring of Vietnam Air Service Co. (Vasco) under Vietnam Airlines Corp. The ministry has licensed five private airlines, VietJet Air, Indochina Airlines, Air Mekong, Trai Thien Air Cargo and Blue Sky Air. But it has been a turbulent ride for most of the new entrants with Indochina Airlines preparing to appear in court with debts nearing VND70 billion (US$3.5 million), Vietjet Air has postponed flights several times, and Trai Thien Air Cargo is having difficulties keeping to its schedule for getting airborne. Meanwhile, Blue Sky hasn’t even launched its first flight, and Air Mekong just got off the ground this past October. Indochina Airlines launched its first commercial flight in November 2008 and has operated ineffectively. Its fuel supplier, Vietnam Air Petro Co (Vinapco), has sued Indochina for a debt at VND24 billion ($1.2 million), ticket sales agents and the carrier’s employees also commencing legal proceedings against the airline. In February, the Ministry of Transport modified the licence of VietJet Air after the Malaysia’s AirAsia acquired a 30 per cent stake in the airline. Vietnam Airlines complained about the deal, however, because AirAsia also gained the right to participate in VietJet Air’s management board. AirAsia was also unhappy with a ruling that the new joint venture’s planes couldn’t bear the AirAsia logo. The ministry explained that it was trying to avoid misleading of consumers into thinking that a foreign carrier was operating in the domestic market. The issue continues to delay commercial flight plans of VietJet Air. A similar issue plagued Jetstar Pacific Airlines – part of the Qantas-backed regional low cost carrier group – because its livery was deemed to be ‘too foreign’ for a domestic Vietnamese carrier. Trai Thien, meanwhile, had put a freighter in place but the CAAV would not issue an operation license because the aircraft was more than 25-years old at the time of the lease expiration. The company will be Vietnam’s first operator of freighters for the domestic and international routes, with the focus on the north-south runs as well as those to and from Northeast and Southeast Asia, should it succeed in getting airborne. Air Mekong on the other hand is enjoying some success with the carrier – 30 per cent owned by US airline SkyWest – operating 32 daily domestic flights linking Hanoi, Danang, Ho Chi Minh City and Phu Quoc Island with the 70 per cent occupancy on each flight. Air Mekong deputy director Doan Quoc Huy said that, in 2011, the company expected to add six aircraft, lifting its fleet to 10 aircraft to satisfy rising demand. Experts attributed the poor performance of private carriers to a lack of world-class experience, weak financing, and a shortage of qualified workers. Jetstar Pacific deputy director Ta Huu Thanh said that liberalisation of the aviation industry could only succeed if there were healthy competition with state-subsidised airlines. Thanh urged the government to adopt policies that would ignite private investment in the aviation sector.