MOT wants to freeze domestic airline licenses until 2015

      The Ministry of Transportation has proposed that no more domestic airlines be licenced until 2015. More than the present five carriers, says Transport Minister Ho Nghia Dung, would make it difficult to manage the aviation industry.
Dung told reporters that Vietnam’s policy is to encourage investment in the aviation industry. However, he added, Vietnam needs to have a clear roadmap for the industry’s development.
For many years, Vietnam had only one air carrier, Vietnam Airlines. Four other air carriers have been licenced in recent years, but only two – Jetstar Pacific and Indochina Airlines – are presently offering service in competition with Vietnam Airlines. Mekong Airlines and VietJet Air have licenses but are not operating.
If Vietnam licences many more airlines now, while the market remains limited, Dung said, this could create difficulties in state management work. He noted that no recently licenced airline has been operating well.
“Current market conditions don’t not ensure that all airlines could operate well if we licenced many more airlines now,” Dung said. “Three or four is a suitable number for the present.”
The deputy head of the Civil Aviation Administration of Vietnam (CAAV), a component of the Ministry of Transport, has also argued against licencing of new airlines “in a way that allows a series of air carriers to be born, and then go bankrupt.”
Citing an example from Indonesia, CAAV maintains that one small problem with an airline can badly affect the image of the national aviation industry. In 2004 in Indonesia, crashes of planes flown by two small airlines were enough for Europe to slap a ban on all 52 airlines licensed by that country from entering EU airspace.
CAAV says government agencies also have to consider the current infrastructure situation when deciding whether to licence more airlines. Currently, all Vietnam’s airlines must park their aircraft overnight at either Tan Son Nhat (HCM City) or Noi Bai (Hanoi) Airport.
The overnight parking capacity of the two airports remains limited. 92 points are projected for 2015. Meanwhile, it is expected that Vietnam will have a fleet of 149 aircrafts by 2015. Moreover, the country’s capacity in aircraft repair and maintenance also remains limited.