New aviation decree to ease burden for firms

Hanoi, November 14, 2018: A Governmental decree drafted by the transport ministry to simplify business conditions for potential investors in the aviation sector has been sent to Prime Minister Nguyễn Xuân Phúc for approval.

Minister of Transport Nguyễn Văn Thể said the draft decree was revised and supplemented for the second time in the past three months after it received ideas from Government officials and aviation businesses. It’s expected to enhance aviation services including aviation transport businesses, airports and aviation service supply according to the reports published in

Under the draft, the investors need to meet conditions such as having aircraft, operational organisation, capital, a business plan and product development strategies to obtain an air transport licence.

A regulation previously requiring the businesses’ plan to suit the aviation transport development plan has been removed from the new draft.

In addition, the minimum capital needed to establish and maintain the businesses’ operation was adjusted to ease the burden on investors. As proposed by the transport ministry, an airline operating up to 10 aircraft will need a minimum of VNĐ300 billion (US$12.83 million), from 11 to 30 aircraft will need VNĐ600 billion, and 30 aircraft and more will need VNĐ700 billion.

These amounts have been cut by more than half compared with the previous draft decision.

Another new point in the second draft decree is that the ministry proposed to raise ownership for foreign investors in the field of aviation transport.

Foreign-invested enterprises must satisfy the following conditions: foreign ownership will not occupy more than 34 per cent of charter capital; at least one Vietnamese individual or legal entity must hold the largest charter capital. In case the Vietnamese person has foreign owned capital that is the largest charter capital amount, the foreign capital contribution shall not exceed 49 per cent of the Vietnamese person’s own.

According to the reports published in “The limitation of the foreign investors’ contribution capital not exceeding 34 per cent of charter capital was aimed to harmonise the attraction of foreign investment capital, but still ensure the rights and interests of domestic investors,” said Thể.

In the new draft decree, the ministry also kept the age of aircraft as stipulated in the Government Decree No 92/2016/NĐ-CP at 20 years of operation for passenger transport aircraft and 25 years for cargo aircraft.

According to Thể, the age of the airline fleet was a sensitive issue that needs to be carefully assessed. The ministry had received comments from Deputy Prime Minister and Foreign Affaris Minister Phạm Bình Minh, Minister of Public Security Tô Lâm and opinions of experts. It would not adjust the regulation on the age of airline fleet immediately, but continue to study and evaluate more carefully and propose revisions at an appropriate time.

Up to September this year, the number of civil aircraft registered with Vietnamese nationality was 175 aircraft, up 18 units over the same period last year, of which Vietnam Airlines has 89 aircraft and Vietjet has 56.

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