The government is revising legal regulations on civil aviation in a move to simplify business conditions, which is expected to ease new investors in participating in the country’s air transport market.
Vietnam’s airports will serve some 144 million passengers yearly by 2020
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Previously, many airlines, such as Vietstar Air, failed to get licenses although they met other demands on capital and flying capacity because one of the requirements for them to be granted licenses is the conformity of their business projects with the aviation industry’s development plan, under the Decree 118/2015/ND-CP issued in 2015.
The draft decree also reduces the the minimum capital required to establish and maintain the businesses’ operation of airlines. As proposed by the transport ministry, an airline operating up to 10 aircraft will need a minimum of VND300 billion (US$12.82 million), from 11 to 30 aircraft will need VND600 billion (US$25.64 million), and 30 aircraft and more will need VND700 billion (US$29.91 million). These amounts have been also cut by more than half compared with the previous draft decision.
In addition, the new draft decree also proposes to rais ownership for foreign investors in the field of aviation transport from the current 30 percent to 34 percent.
It will also kept the operational age of aircraft as stipulated in the government Decree No 92/2016/ND-CP at 20 years for passenger transport aircraft and 25 years for cargo aircraft.
According to Minister of Transport Nguyen Van The, the draft decree was revised and supplemented for the second time after it received feedback from government officials and aviation businesses. It is aimed to enhance aviation services including aviation transport businesses, airports and aviation service supply.
National development plan
The Transport Ministry hopes the new regulations will help Vietnam meet the national aviation transport development plan till 2020 with a vision to 2030 ratified by the prime minister early this year, which makes the industry more attractive to private investors.
Under the plan, the number of aircrafts in the country will grow to more than 220 by 2020 and 400 by 2030, increasing by 70-100 compared to the previous plan. The aviation industry will also have 23 airports with an annual traffic of 144 million passengers by 2020 and 28 airports with an annual traffic of 308 million passengers by 2030.
The International Air Transport Association also estimated that between now and 2020, passenger transportation in Vietnam is expected to rise by 16 percent, and from 2020 to 2030, by 8 percent. Cargo transportation will increase by around 18 percent until 2020, and 12 percent between 2020 and 2030. The growth will make Vietnam the world's fifth fastest-growing aviation market by 2035.
Under the estimates, Vietnam will need at least 10 additional new airlines to meet the growing demand. The country has so far licensed five: Vietnam Airlines, Jetstar Pacific Airlines, Vietjet, Vietnam Air Services Company (VASCO) and Bamboo Airways.
However, to open opportunities for new investors to join the aviation market, there is still a need to increase the capacity of airports as the country is grappling with capacity constraints at its larger airports, especially in Tan Son Nhat of Ho Chi Minh City and Noi Bai of Hanoi.
