MOT’s report says private airlines are facing big difficulties

The special report submitted by the Ministry of Transport (MOT) to the government several days ago, writes that most of the private airlines are facing big difficulties in their operation.
Several years ago, Vietnam began licensing private airlines in a plan to create a competitive aviation market and stop the monopoly of the state owned Vietnam Airlines. The policy on allowing different economic sectors to join the market and provide air transport services is mentioned in the Law on Civil Aviation promulgated in 2006. The article No 5 of the law stipulates that the healthy and fair competition among institutions and individuals from different economic sectors that join the civil aviation market is a principle protected by the laws.
However, it is really not easy for private airlines to join the aviation market and compete well with other rivals.
Dong Duong Airline Joint Stock Company (VP) was granted license in May 2008, but it had to stop providing flights in October 2009. Under the Decree No 76, the business license will be revoked if airlines stop providing transport services and do not get air operator certificate (AOC) within 12 months.
After the Civil Aviation Authority of Vietnam (CAAV) urged VP to show AOC, on December 31, 2010, VP sent a document to the Ministry of Transport (MOT), asking of the permission to extend the business license on providing air transport services until the end of December 31, 2011, so that it can gather enough time to make the documents for applying for AOC.
MOT said it accepts the proposal at the moment, provided that VP has to check and pay all the debts to the companies which provided services to the airline by the end of June 2011. If VP cannot pay debts by the deadline, it will have the license revoked.
Currently, VP bank is reportedly bogged down in debts. Especially, it does not have money to pay to fuel supplier. After a lot of efforts to call for more capital, it is now still unclear about the result of the financial restructuring.
As for VietJet, though the airline got the license in late 2007 already, it has not begun providing air transport services yet. In principle, the business license of VietJet has become no longer valid. However, MOT, after recognizing its efforts to put aircrafts into operation in the last time, has proposed to extend the business license until the end of June 30, 2011.
In order to enjoy the “favor”, VietJet will have to clarify the issues relating to the plan to develop the fleet, build up the symbol, and the issues relating to the capital and shareholders as per request by the laws. If VietJet cannot satisfy the requirements, it will have the business license revoked.
Regarding the Ngoi Sao Viet airline, if referring to the plan on air transport service licensing approved by the government, the airline will only be able to get the license in 2012. The airline has good conditions to operate, from material facilities to the crew, because its staff comes from antiaircraft defense. Meanwhile, it plans to serve dual purposes--the national economy and national defense.
Jetstar Pacific Airlines has been operating over the last several years, but it still cannot settle the problem with its logo. In 2010, CAAV four times released documents, requesting Jetstar Pacific Airlines to build up a new logo which must be different from the one of Australian Jetstar Airways, and to remove billboards with wrong specifications in terms of names, logos and colors at airports.
In late 2010, after Jetstar Pacific submitted the plan on new logos, MOT proposed the government to accept to extend the business license of the company until the end of December 31, 2012.
However, MOT has also reminded Jetstar Pacific to clarify the plan to use the new logo, the plan to develop the fleet and some other issues. If the airline does not satisfy the requirements, it may face the license revoking.
The rare bright part in the picture of the private airlines at this moment is the one of Air Mekong. Though Air Mekong has only become operational since October 10, 2010, it now has four Bombardier CRJ900s, already which fly on 14 domestic air routes. The company plans to equip with two other aircraft by June 2011, and another four by October 2011.