Vietjet Air seeks to delay take-off until next year

November 19, 2009

VietJet Aviation Joint Stock Co. (Vietjet Air) is seeking approval to commence its domestic flights in May 2010, or five months later than the deadline for the private airline.

Vo Huy Cuong of the Civil Aviation Administration of Vietnam (CAAV) confirmed Vietjet Air’s application for such approval from the Ministry of Transport and pointed out lower-than-expected market demand as one of the reasons for the delay again. The private carrier had earlier been given December as the deadline to launch its maiden flight or have its license revoked as per civil aviation regulations.

The director of CAAV’s Air Transport Department told the Daily on the phone on Monday that Vietjet Air said in the application that it would need more time to complete procedures to obtain a certificate to operate passenger aircraft as required.

“They (Vietjet Air) are completing the procedures,” Cuong said. He added that CAAV would be the competent authority to grant such an aircraft operation certificate to the first private airline licensed in Vietnam.

Cuong said CAAV had reported to the ministry that Vietjet Air’s application was reasonable as the market was really in a difficult time as a result of the global financial turmoil and the fact that the airline was actually determined to operate its flights.

“We are waiting for the ministry’s decision,” Cuong said in response to the Daily’s question about the possibility for Vietjet Air to retain the license. “Our policy is to create the most favorable conditions in compliance with regulations for enterprises.”

Vietjet Air chief executive officer Nguyen Duc Tam told the Daily via email before Cuong’s confirmation that the airline was hurriedly completing necessary procedures as well as investing in preparations for aircraft operation.

“We are actively making preparations and Vietjet Air’s plan to fly will become a reality soon,” Tam answered one of the questions raised by the Daily in relation to the date when the carrier took off.

Tam clarified Vietjet Air was working on plans to lease and maintain aircraft, register the intellectual property rights for its brand and logo in Vietnam, Japan, Hong Kong and Thailand and other markets the airline planned to fly to.

“We plan to operate two Airbus A320s and then gradually increase our fleet after six months of operation,” Tam said and added that the carrier was investing heavily in human resources and operations at its offices in the north and the south.

Viejet Air still sticks to its previously-publicized plan to conduct flights to Hanoi, HCMC and Danang in the initial time before expanding services to Bangkok, Singapore, Malaysia, China, Korea and Japan.

Vietjet Air was licensed in December 2007, with charter capital of VND600 billion (some US$33.5 million), but has had to announce several delays for take-off due to the impact of the soaring high fuel costs in mid 2008 and low market demand among others.

Tam said the soaring price of fuel in a short time in 2008 dealt heavy blows to many airlines and forced them including the private one to review their business strategies.

Tam indicated the volatile price of fuel and low market demand as among the major challenges to airlines. “In this current situation, we must be cautious about conditions and our business strategy.”

Despite a host of challenges ahead, Vietjet Air is still committed to operating commercial flights. The civil aviation law regulates two years are the valid period for a license granted to a new airline.



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