Debt-ridden airlines face closure

Two private airlines could lose their licences if they fail to clear their debts, mainly to a State-owned fuel supplier, by the end of this month, according to Dau Tu newspaper (Vietnam Investment Review).

In January, the Ministry of Transport ordered Indochina Airlines, which had stopped flying 18 months earlier, and Trai Thien Air Cargo to settle their debts by the end of June.

However, Viet Nam Air Petrol Company (Vinapco), the main fuel supplier to both, said it had not received any payments from them so far.

Indochina Airlines had owed Vinapco VND20 billion (US$975,000) for more than two years now, a Vinapco executive said on condition of anonymity.

Vo Huy Cuong of the Civil Aviation Administration of Viet Nam (CAAV), which will revoke the licences, said he had been unable to get in touch with the carrier’s executives for several months.

Trai Thien Air Cargo, the first licensed petro-chemical carrier, has almost stopped operations, with its executives quitting and workers not being paid.

In the middle of last month, CAAV also ordered Jetstar Pacific Airlines (JPA), the biggest non-State carrier in the country, to pay VND170 billion ($8.3 million) it owed to Vinapco.

Vinapco had earlier asked CAAV for permission to stop supplying fuel to JPA.

Jetstar proposed a roadmap for clearing its debts to Vinapco and asked it to renew the supply contract which expired last month, Tran Van Phuc, Vinapco’s managing director, said.

The roadmap sought to pay small amounts over a long-time frame, he said.

CAAV blamed non-State carriers’ problems to inadequate preparations and their undue optimism in the first place.

Phuc said: “Aviation authorities should examine carriers’ financial capacity carefully before issuing licences.

“Otherwise, we will become their reluctant creditors.”

Doan Quoc Viet, chairman of Air Mekong, the only surviving non-State airline, said private carriers should explore their own paths in a market completely dominated by state-owned Viet Nam Airlines with its unlimited capacity. — VNS

Tags: Jetstar Pacific, Vietnam aviation, Vietnam aviation industry, Vietnam aviation market