The Ministry of Planning and Investment and the Ministry of Transport have proposed that Vietnam's prime minister cease considering the establishment of Kite Air, a new carrier proposed by a local hospitality group, as the country looks to prioritize the recovery of its aviation sector post-pandemic.
The planning ministry, tasked with evaluating the Kite Air airline project, has backtracked on the proposal for the carrier’s establishment it put forward to the prime minister in January.
Vietnam’s Thien Minh Group applied for a license to launch Kite Air in the second quarter of this year with a capital investment of VND5.5 trillion (US$237.6 million).
If licensed, Kite Air will use six ATR72 planes in the first year.
Amid fears over the impact of the coronavirus pandemic, the Ministry of Transport in June proposed Prime Minister Nguyen Xuan Phuc focus on the recovery of the aviation market and removal of obstacles facing operational airlines.
The founding of new air carriers should only be considered after the aviation market recovers, it said.
According to the transport ministry, the application for Kite Air’s establishment was made in 2018-2019, when the domestic and international aviation markets saw growth of 13.2 to 20 percent a year.
However, the aviation sector has been hit hard by the COVID-19 pandemic, with Vietnam being forecast to serve only 42.7 million passengers in 2020 — a 46-percent year-on-year decrease, the Civil Aviation Authority of Vietnam (CAAV) said in a recent review.
Currently, five Vietnamese airlines — Vietnam Airlines, Pacific Airlines, Vietjet Air, VASCO, and Bamboo Airways — with 214 aircraft in their fleets are only operating at less than 50 percent of their capacity on domestic routes and some international cargo flights, CAAV reported.
As such, the planning and transport ministries recommended that PM Phuc temporarily stop considering the founding of Kite Air to ensure the growth of the market and efficiency of the airlines.