Aviation authority proposes new deadline for Indochina Airlines

Financially troubled private carrier Indochina Airlines may have one last chance to restructure and take off after the state management authority agreed to extend its deadline to revoke the company’s air transport license.

The Civil Aviation Authority of Vietnam (CAAV) last week sent a document to the Ministry of Transport (MoT) proposing not to revoke Indochina Airlines’ air transport license until December 31, 2011.

Previously, Indochina Airlines asked the CAAV and MoT to delay the license withdrawal, saying that it was trying to find partners and restructure its capital.

“We recognised the efforts from Indochina Airlines in restructuring its finance and resuming its air transport business plan. To create favourable conditions for the airline to return to the market, we proposed maintaining its air transport licence,” said Lai Xuan Thanh, deputy director of CAAV.

The final decision would belong to the MoT. But if the proposal got the green light, Thanh said, Indochina Airlines would have to immediately submit plans for financial restructuring, debt repayment and new business operations.

Indochina Airlines, established in May 2008, was the first private airline in Vietnam. However, it stopped all flights in October 2009 when financial troubles pushed the airline close to bankruptcy.

This airline is said to owe VND70 billion ($3.5 million) to ticketing agents, fuel supplier Vinapco and other service providers.

Ha Dung, chief executive officer of Indochina Airlines, said the airline was seeking cooperation from domestic investors, not foreign investors.

Dung said that the current expanding air transport market was attracting many domestic investors to the airline. He added Indochina Airlines planned to raise its legal capital from VND200 billion ($10 million) to VND500 billion ($25 million), the required level to open international air routes.

Thanh said that the return of Indochina Airlines would help improve competitiveness in Vietnam’s air transport market.

The national flag carrier Vietnam Airlines remains the biggest player in the country’s airline market, with an 80 per cent market share. According to a report released last month by the carrier, the domestic market last year rose 31.1 per cent against 2009.

Currently, Vietnam has six airlines, but only four are in operation, including Vietnam Airlines, Jetstar Pacific Airlines and newcomer, Mekong Air.

The first licensed private airline, VietJet Air, last year joined hands with AirAsia to form a low-cost carrier within the country. However, this airline has not yet taken flight. – VIR

Tags: Indochina Airlines, Vietnam aviation, Vietnam aviation industry, Vietnam aviation market