The prime minister has signed a decree to stipulate a minimum capital of VND300 billion (USD14.4 million) to set up a new airline, an increase from the current VND200 billion (USD9.52 million).
The decision comes in the wake of the dissolution of several local private airlines revealed difficulties for small carriers in the domestic aviation industry.
In February this year, Air Mekong had to halt operation of its flights as part of their human resource restructuring. However, according to some news sources, it incurred losses of three to four times its total registered capital of VND600 billion (USD28.57 million).
Indochina Airlines, the country’s first private airline, had its license revoked in 2011, only six months after its establishment, also due to large losses, which were reportedly double its registered capital of VND400 billion (USD19.04 million). Meanwhile, Trai Thien Air Cargo was licensed.
Under Government Decree 30 on aviation business and transport activities, the capital threshold of VND300 billion will be applied to airlines operating solely domestic routes, while those operating 10 airplanes on international routes must have capital holdings of at least VND700 billion (USD33.6 million).
But the regulation also varies depending on the number of aircraft. Carriers operating between 11 and 30 planes for international flights would be required to have at least VND1 trillion, while those with the same number running only domestic flights must have VND600 billion.
Carriers with more than 30 planes on international routes must have registered capital of VND1.3 trillion (USD61.9 million), wile those with the same number that run only domestic routes must register VND700 billion (USD33.3 million)
Foreign shareholders' capital remains limited at 30% of the total registered capital of any carrier.
The decision also stipulates that any airline that does not operate flights within 18 months of being licensed will have their license revoked.
The decree is to become effective starting June 1, 2013.
