Vietnam bans starting up new airlines until 2022

Vietnam has banned the creation of new airlines until at least 2022. The decision results from the coronavirus pandemic and its devastating financial consequences for the global aviation industry.

Vietnam’s Deputy Prime Minister Trinh Dinh Dung stated that there would be no new airlines in Vietnam until the aviation industry has fully recovered from the corona crisis. The decision is in line with a Ministry of Transport proposal back in May. The news is set to come as a shock to Vietnamese airline startups looking to take off over the coming two years. Among others, Vietstar Airlines was engaged in getting new airlines off the ground. These companies will now have to wait until the government allows the issuing of licenses again.

Vietnam currently has five commercial airlines. These consist of Vietnam Airlines, VietJet, Jetstar Pacific Airlines, Bamboo Airways and Vietnam Air Services (VASCO). At the moment, flag carrier Vietnam Airlines and budget airline VietJet have a 75 percent market share. Conditions are now uncertain, as it will be increasingly difficult to compete in the aviation market over the coming years.

Before the coronavirus pandemic hit, the Vietnamese air travel market was steadily growing at about 20 percent over the last few years and thus attracted new business. Bamboo Airways was set to compete against both these airlines, flying brand new aircraft and aiming to become Vietnam’s first 5-star airline. Though domestic flights are reportedly back to pre-coronavirus levels, conditions are now uncertain