Government loosens aviation business conditions

Government loosen airport business conditions

Decree No.89/2019/ND-CP issued on November 15 to amend and supplement articles related to the provision of conditional business lines in the field of civil aviation, creating favourable conditions not only for enterprises to set up airlines but also for investing in airports.

Specifically, the minimum capital, including equity and loans, to establish and maintain an air transportation business exploiting 10 aircraft is VND300 billion ($13 million), from 11 to 30 aircraft is VND600 billion ($26.1 million) and for those over 30 aircraft is VND700 billion ($30.43 million). The minimum capital required to establish and maintain a general aviation business is VND100 billion ($4.35 million).

The decree also regulates that air transport businesses which have foreign investment need three conditions. Foreign investors can account for no more than 34 per cent of the charter capital and must have at least one Vietnamese individual or a Vietnamese legal entity holding the largest portion of the charter capital. In case of a Vietnamese legal entity with a foreign-invested contribution, the foreign capital share shall not exceed 49 per cent.

Previously, Decree No.92/2016/ND-CP stipulated that the foreign ownership limit in an air transport business is set at 30 per cent.

This new decree also repeals the regulations on approving the transfer of shares, capital contribution, and increasing the capital of aviation enterprises to foreign partners.

Regarding the conditions for granting an airport business license, Decree 89 stipulates that the minimum capital level to be selected is VND100 billion ($4.35 million), and foreign investors cannot hold more than 30 per cent of the charter capital.

The air transport business license shall be revoked in case of failing to maintain the minimum capital requirement for three consecutive years or stopping air transport operations for 36 consecutive months. In addition, an air transport business license would be revoked if the company cannot be granted an aircraft operator certificate within 36 months from the date of issuance of the licence.

In addition, Decree 89 stipulates that the age of used aircraft imported into Vietnam to carry passengers cannot exceed 10 years from the date of delivery to the time of import into Vietnam as appropriate co-purchase or hire-purchase contract and can be no more than 20 years from the date of release to the end of the lease. Particularly, helicopters cannot be used for more than 25 years from the date of release to the end of the lease.

In Vietnam, Van Don International Airport (Quang Ninh) has become the first airport invested by a private sector entity (Sun Group), which will hopefully provide a much-needed push for private investment.

Meanwhile, the remaining 21 airports are operated by Airports Corporation of Vietnam (ACV), which is 95 per cent owned by the state. ACV is also being proposed by the government to appoint a contractor to build Long Thanh airport with the total estimated investment of $4.8 billion in the first phase.

In addition, ACV was also proposed by the Ministry of Transport to invest in the construction of terminal T3 of Tan Son Nhat International Airport with the total investment of over VND11 trillion ($478.26 million) and waiting for the prime minister's comments.

Previously, a number of private enterprises voiced their desire to invest in the construction of T3 terminal, including Imex Pan Pacific Group-IPP, Vietjet, and FLC Group.