The Planning and Investment Ministry has suggested that the PM delays his approval to new carrier KiteAir’s investment proposal over Covid-19 impacts. 

The establishment of the new airline would add to the business woes wreaked on the local aviation industry by the pandemic, the ministry said in a document recently sent to Prime Minister Nguyen Xuan Phuc. "A suitable time for a new carrier would be 2022 when the market has recovered."

The ministry added that the current priority and focus should be the restoration of domestic and international aviation markets and support for existing carriers.

Earlier, in July, the Transport Ministry (MoT) had also proposed that the government not license any new carrier, including KiteAir, till 2022, when the local aviation market is expected to recover.

Based on the MoT’s proposal, Deputy PM Trinh Dinh Dung in July "agreed in principle" with the temporary suspension as proposed by the MoT. Dung, however, assigned the MPI, as an investment proposal appraisal agency, to report to the PM about the KiteAir investment proposal which was already submitted by hospitality group Thien Minh.

An ATR-72 aircraft, which KiteAir plans to use in its first year of operations.
Photo by Reuters/Pichi Chuang.

The MPI had said earlier that KiteAir has sufficient legal basis to have its investment proposal appraised. The MoT, meanwhile, had said establishment of the new carrier was in line with the orientation and development plans of the industry.

But in April, amid the Covid-19 pandemic, the PM requested ministries to review and consider the establishment of any new carrier, including KiteAir, given the new context.

KiteAir, which planned to take off in the second quarter of 2020, was to be headquartered in the central province of Quang Nam with a charter capital of VND1 trillion ($43 million), invested in by Thien Minh, a leading Vietnamese hospitality group.

It planned to operate six short-haul ATR-72 aircraft with a capacity of 78 seats in the first year of operation, and expand the fleet to 30 jets by the fifth year, including 15 narrow-body Airbus A320/321 aircraft.