MIAMI – Vietnamese Deputy Prime Minister Trinh Dình Dung has banned all new startup airlines until at least 2022, thus confirming an earlier proposal by the Ministry of Transport back in May.

The Minister of Transport Nguyen Van explained the 2022 end date by saying “In the most optimistic scenario, only in 2022 the local aviation market could reach the result it did in 2019.”

Photo: Malcolm Lu

New Startups Affected

This is, of course, dire news for new startups planning on taking advantage of a new chapter in aviation with a more level playing field as far as demand goes.

Vietstar Airlines and Kite Air were both very much invested and close to getting their airlines airborne. These airlines now must wait for government approval and permit to begin operations.

The MOT is focused on first restoring domestic air travel, with the Hanoi to Ho Chi Minh City route the 4th busiest domestic route globally, before it looks to the future and has its money in other smaller airlines.

Pre-pandemic, Vietnamese air travel had grown a hefty 20% steadily over the past five years, and MOT officials are eager to watch that trend increase again.

According to the MOT, the pandemic is under control and domestic travel in Vietnam is already at pre-pandemic capacity.

Photo: Airbus.

Current Airlines in Vietnam

Vietnam’s five major airlines are flag carrier Vietnam Airlines (VN), domestic LCC Vietjet (VJ), Jetstar Pacific (BL), Vietnam Air Services (0V), and new Bamboo Airways (QH). Qantas recently gave up its 30% stake in Jetstar Pacific, now putting it in direct competition with other Vietnamese LCCs.

Pre-pandemic, QH ordered multiple Boeing 787 in order to compete directly with Vietnam Airlines (VN) internationally to become the country’s first 5-star airline. Now the new airline will have to try and bounce back as domestic capacity surges but not for international travel.

The Vietnamese government is working hard at keeping the pandemic under control, and so far domestic travel has done exceptionally. Now it must focus on international travel and how it can get that side of its airlines back in the sky.