Vietnam Today > Vietnam Business

A poster features Indochina Airlines before it takes off in November 2008. The transport minister has decided to revoke licenses of Indochina Airlines and Trai Thien Air Cargo - Photo: Binh Nguyen

HCMC - The Ministry of Transport on Monday decided to nullify the air business licenses of Indochina Airlines and Trai Thien Air Cargo as they have not reported their financial capability updates and flight plans as repeatedly required by the Civil Aviation Administration of Vietnam (CAAV).

Vo Huy Cuong, director of CAAV’s Air Transport Department, told the Daily on the phone that the decision came officially on Monday as Indochina Airlines had been grounded for more than two years while the country’s cargo carrier Trai Thien had not been able to take off more than two years upon obtaining a license.

The decision meant an axe had fallen on the two private airlines after several times CAAV had tried to contact and tell them to submit plans for operations but to no avail. Cuong said these carriers would have to apply for a new license if they wanted to join Vietnam’s aviation market that has registered average annual double-digit growth over the past years.

Trai Thien Air Cargo received a business license in Jun 2008 from the HCMC Department of Planning and Investment with charter capital of VND500 billion (around US$23.8 million). In 2009, the Ministry of Transport approved the carrier as the first air cargo airline of Vietnam to provide services on both local and international markets.

Trai Thien Air Cargo had been in negotiations with foreign companies to lease Boeing 737-300 freighters converted from passenger aircraft with the main deck designed for pallets and containers. The airline had planned to receive the first Boeing 737-300Fs in the first half of 2010 to launch services in the same year.

After being licensed, Trai Thien Air Cargo said it would have 10 freighters to transport export and import goods of local companies among others. However, aviation business has sour for the airline when it failed to bring the first Boeing 737-300Fs into Vietnam in September 2010 as planned.

Trai Thien Air Cargo was unable to meet Vietnam’s aviation safety and security standards for the leased aircraft. CAAV explained to the Daily at that time that aviation regulations clarified an aircraft would be licensed to be operational in Vietnam if it was less than 25 years old to the time of lease contract termination.

In the same boat was Indochina Airlines, which had its license nullified for not having been unable to resume services since its suspension over two years ago. CAAV had told the Daily that fate of this debt-laden airline remained undecided as of last Saturday.

Earlier this year, Indochina Airlines wrote to the Prime Minister, the transport ministry and CAAV seeking to keep its license throughout 2011 to have time to restructure operations and pay off debts for service providers at airports in Vietnam, including Vietnam Air Petrol Co. (Vinapco).

But, the ministry had decided to revoke the license of Indochina Airlines as it had not showed any sign of resuming services and not responded to CAAV’s requirements for meeting conditions for VND200 billion (around US$9.5 million) as chartered capital for an operator of domestic flights, debt payment for partners, and an air operator certificate (AOC).

Licensed in mid-2008, Indochina Airlines launched its commercial flights with two leased Boeing 737-800 aircraft on November 25, 2008 when global economic turmoil dealt a heavy blow to the world’s airlines industry. The carrier has been grounded since November 2009 due to financial constraints.