Airlines to get wings clipped

According to the Ministry of Transport (MoT), Indochina Airlines was in the most critical situation. By mid February 2011 total time for which Indochina Airlines ceased operating had exceeded 14 months. As per existing state regulations, the airline, therefore, would have been ineligible to maintain its aviation transport licence.

To help the private airline embrace capital restructuring, the MoT reportedly asked the prime minister for Indochina Airlines’ licence deadline extension to December 31, 2011 on the condition that the private airline pays  up all debts owed to business partners.

Vietnam Air Petrol Company Limited (Vinapco) general director Tran Huu Phuc told VIR that Vinapco received no feedback with Indochina Airlines’ repayment of VND20 billion ($966,183), it owed to the avation fuel supplier.

“With eroded reputation among business partners and passengers, it would be hard for Indochina Airlines to continue flying even after its successful capital restructuring,” an aviation expert commented.

Another private airline, the Vietjet Aviation Joint Stock Company, was in a similar position when it would face the danger of having its operational licenced revoked on June 31, 2011 unless it could fly before June, 2011.

Vietjet was licenced to trade in aviation transport in late 2007. It, however, could not take wings on the back of continually dropped flying and shareholder change plans.

Trai Thien Air Cargo, Vietnam’s first licenced private cargo transportation airline, is also facing the threat of having its licence withdrawn due to financial distress.

Industry experts assume that it would be hard for fresh private airlines to stay in the local aviation market which features an annual transportation capacity of 14.1 million passengers and 176,000 tonnes of goods, even when Vietnam is forecast to become the third fastest international passenger and freight transport market worldwide.

Vietnam Airlines and Jetstar Pacific are currently two key players in the domestic aviation market, both of which hold a 90 per cent stake.

Both players unveiled business expansion plans for 2011. Vietnam Airlines intends to procure more aircraft for its current fleet, while Jetstar Pacific also set to modernise its fleet if its proposal for operational licence extension to December, 2011 with a new logo got the nod from governmental management agencies.