Temporary cessation in approval of new airlines

Many aircraft now sitting idle due to COVID-19 implications, causing huge waste of resources

The Ministry of Transport (MoT) has just released Notice No.154/TB-BGTVT about the conclusions of Minister Nguyen Van The from the recent online meeting reviewing the establishment of new airlines amidst COVID-19 complications to ensure efficient state management of the aviation sector as well as the sector’s sustainable development.

Along with this, the MoT chief tasked the Civil Aviation Administration of Vietnam (CAAV) to soon pen a report for the prime minister reviewing the establishment of new airlines in the current situation, with special attention to the criteria of the airport to serve as their base of operation.

COVID-19 pandemic is dealing a heavy blow to the aviation transport market both in Vietnam and around the world, with no foreseeable timeline for its end. The formation of new airlines, therefore, would be temporarily postponed until the sector resumes normal operation, according to the MoT leader.

“Our top short-term priorities are reviving the domestic and international aviation transport market and removing hardships for operational local airlines. The licensing of new airlines would be considered after the market rebounds,” he said.

With regards to the granting of aviation transport business license to privately-held Vietravel Airlines, Minister The has assigned the competent agencies to handle the case in light of the prime minister's Decision No.457/QD-TTg dated April 3, 2020 approving the project's investment proposal.

Along with this, Vietravel Airlines would need to complete application procedures for an aviation transport business license and the CAAV to carefully evaluate the record with emphasis put on the viability and efficiency of the business plan and the company’s development strategy amidst the harsh implications of COVID-19.

According to the assessment of CAAV, COVID-19 has brought sharp declines to both Vietnam’s and the global aviation market.

The agency forecast a 46 per cent decline in the number of passengers to only 42.7 million this year compared to the previous year. Even in the best-case scenario, the indexes of the aviation transport market in 2022 would only approach those in 2019.

The Vietnamese market currently houses five carriers, including national flag carrier Vietnam Airlines, and four private ones – Jetstar Pacific, Vasco, Vietjet, and Bamboo Airways – which altogether operate 214 commercial aircraft.

Early this month, after getting the nod from the MoT to resume passenger transport, the airlines are gradually resuming domestic routes. However, due to people’s sinking demand for air travel and as international routes are yet to be re-opened, idle aircraft amount to hundred, causing huge losses to the carriers.

To support local airlines in COVID-19 times, the MoT has proposed the prime minister to consider exempting import duty and environment protection fees on fuel used by airlines from January 23 to the end of December 2020, or for 90 days after the prime minister announced the end of the pandemic.

According to Vietnam Airlines’ deputy general director Le Hong Ha, aviation is one of the sectors hardest hit by the pandemic, meanwhile, it is the first link in the supply chain of various economic sectors and one of the essential premises for a rebound of trade and investment activities post-pandemic.

“Support policies, therefore, are crucial for the aviation sector to sustain operations and rebound, and to support the efforts of the whole nation to achieve an upswing in development when the pandemic is over, responding to the call of the government,” he said.