Sunday, November 25, 2007

Vietnam's open sky private airlines

Private airlines to get off the ground?
13:37' 24/11/2007 (GMT+7)

VietNamNet Bridge - Vietnam’s private airline industry may get off the ground after a licensing proposal from Vietjet Aviation Joint Stock Company won approval from transportation authorities.

A recent decision may help the private aviation industry take off
A number of local companies have recently announced plans to establish private airlines, but Vietjet is the first to file and win approval from the Ministry of Transport (MoT).

The ministry is now proposing that the Prime Minister make the final decision on licensing the airline, which has a chartered capital of $30.8 million.

The move fits into the country’s commitment to “opening the skies” of Vietnam as of 2010.

Under the amended Civil Aviation Law and Decree 76/2007/ND-CP on aviation transport and general aviation activities, businesses which are qualified in terms of chartered capital, professional experience, organisation, business plan and strategy will be licensed for aviation.

Sources from the MoT’s Civil Aviation Administration said the agency has proposed the establishment of two to three private aviation firms from now to 2010.

According to Nguyen Dinh Cung, head of the Macro-economic Policy Research Board under the Central Institute for Economic Management, Vietnam’s domestic aviation market is small and riddled with complicated procedures that heavily favour local firms.

“The restriction on licensing new aviation firms is a reasonable policy so as to ensure an economy of scale and investment efficiency. What investors really need is transparency on this policy,” Cung said.

“To the state, their biggest role is to ensure that licensing conditions are satisfied in order to supervise the licensed business’ operations in line with their business plan and international standards.”

Cung’s view partly shed some light on a recent decision by the Prime Minister to turn down a proposal from the Vietnam Shipbuilding Industry Group.

In August, the corporation reached an initial agreement with AirAsia to establish a $30 million joint venture to operate a budget airline.

Cung said it was totally reasonable that Vinashin was not permitted to join the aviation sector as its key business was shipping.

“As a result, if the State wanted to invest more in this sector, investment should be focused on the national flag carrier Vietnam Airlines instead of a new business,” he added.

Pacific Airlines is the only joint stock company at present but its shares are held by state-owned companies and Qantas Airways.