Vietnam issues license to its first private airline

6 December, 2007:

Vietnam has decided to give the green signal for the country's first private airline.

According to a report, the country’s Prime Minister Nguyen Tan Dung has given the nod to issue a licence to VietJetAir, the nation’s first private airline. According to officials in the administration, the prime minister has agreed in principle to allow the company to operate, and has assigned the transportation ministry to prepare the legal documents.

As of now, Vietnam allows only the government-owned flag carrier Vietnam Airlines and its wholly-owned subsidiary Pacific Airlines to operate domestic flights. The new development comes following complaints by tour operators and travelers in this regard.

With the licence on its way, VietJetAir is likely to launch operations by 2008. Shortage of available aircraft to lease is said to delay the commencement of operations till 2008. The private company is expected to be a low-cost, short-haul carrier, serving domestic and some regional routes. The new company will have a licensed capital of 600 billion Vietnamese dong, which comes to about $38 million.

Detailing strategies, VieJetAir officials said that they will go after overpriced or under-served routes which are aplenty in the nation. Meanwhile, the tourism industry experts believe that there are too few operators in Vietnam to meet rising demand on domestic routes. It has been noted that tour operators in the country often have to book tickets very long in advance due to the limited number of planes . This calls for many more domestic airlines as possible in the communist nation.