The socialist republic of vietnam

PROVIDING FOR CONDITIONAL BUSINESS SECTORS OR ACTIVITIES IN THE CIVIL AVIATION INDUSTRY

1. This Decree provides for conditional business sectors or activities in the civil aviation field, including:

a) Air transport business;

b) Airport or airdrome business;

c) Airport, airdrome service business;

d) Design, manufacture, maintenance or testing of aircraft, engines, propellers and equipment thereof in Vietnam;

dd) Air navigation service business;

e) Aviation staff training, coaching and mentoring service business.

2. This Decree shall not apply to specialized airports.

Article 2. Scope of application

This Decree shall apply to organizations or individuals engaged in providing for conditional business sectors or activities in the civil aviation field within the territory of Vietnam.

1. Airport or airdrome service business refers to the services directly involved in aircraft operations, air transport operations and flight operations performed at airports or airdromes.

2. Airport operation service business refers to profitable airfield and other airport infrastructure operations under the authority of airport corporations.

3. Air transport service business includes two forms of air transport service business and general aviation service business.

a) Air transport service business refers to air transportation of passengers, luggage, goods and postal items for profitable purposes.

b) General aviation service business refers to profitable general aviation operation services performed by aircraft other than unmanned aircraft systems or ultralight aircraft vehicles as defined in Article 21 of the Law on Vietnam Civil Aviation.

1. The confirmation of capital contribution shall conform to the following regulations:

a) With respect to the capital contribution denominated in Vietnamese dong and a freely convertible foreign currency, the confirmation of escrow fund by a credit institution must be submitted by an organization or individual applying for a license. The release of escrow fund held by a credit institution shall only be performed after an organization or individual obtains a license, or otherwise receives a written notification of refusal to issue such license;

b) With respect to capital contribution made in the form of an asset directly serving business purposes, the certificate of valuation issued by a valuation body having authority to attest monetary value of an asset on the date of preparation of an application dossier for a license in accordance with laws on valuation;

c) Enterprises currently involved in conditional business sectors or activities in the civil aviation industry which have their demands for other additional business sectors or activities as defined herein may use financial statements receiving an auditor’s unqualified opinion prepared in the 02 years immediately preceding the date of submission of that application dossier, or submit a bank guarantee as a capital confirmation.

2. With respect to enterprises involved in multiple conditional business and investment sectors or activities referred to herein, the minimum applicable amount of capital is the highest level of capital required in all of business sectors and activities.

3. Any organization or individual directly providing a confirmation of capital owned by an enterprise shall assume responsibility for accuracy and authenticity of data on the date of submission of such confirmation.

Chapter II

AIR TRANSPORT SERVICE BUSINESS

Article 5. Eligibility requirements for air transport service business

1. Conform to the air transport development plan.

2. Meet requirements concerning plans to ensure availability of aircraft for operations, organizational machinery, capital, business plans and product development tactics referred to in Article 6, 7, 8, 9 hereof.

3. Obtain an air transport business license issued by the Ministry of Transport according to the Prime Minister’s permission.

4. Regulations laid down in this Chapter shall not apply to training, coaching or mentoring services provided to crew members, and coaches.

Article 6. Requirements concerning plans to ensure availability of aircraft for operations

1. Plans to ensure that aircraft is available for operations for the period of 05 years from the proposed date of business commencement shall include the following contents:

a) The number, type and service life of aircraft;

b) The form of ownership (purchase, hire-purchase or charter);

c) Operation and maintenance planning and scheduling, and arrangements for personnel to meet aircraft operation and maintenance requirements;

d) Financing for aircraft ownership.

2. The service life of used aircraft imported into Vietnam shall be provided for as follows:

a) With regard to aircraft used for carriage of passengers, the service life must be a period of less than 10 years ranging from the date of manufacture to the date of importation under terms and conditions of a purchase or hire-purchase agreement; a period of less than 20 years ranging from the date of manufacture to the date of termination of an aircraft charter agreement. As for used helicopters, the service life must be a period of less than 25 years ranging from the date of manufacture to the date of termination of a charter agreement;

b) With regard to aircraft used for transportation of goods, letter post, postal parcels, and for general aviation aircraft, the service life must be a period of less than 15 years ranging from the date of manufacture to the date of importation under terms and conditions of a purchase or hire-purchase agreement; a period of less than 25 years ranging from the date of manufacture to the date of termination of a charter agreement;

c) With regard to aircraft used for carriage of passengers, the service life must be a period of less than 10 years ranging from the date of manufacture to the date of importation under terms and conditions of a purchase or hire-purchase agreement; a period of less than 20 years ranging from the date of manufacture to the date of termination of an aircraft charter agreement.

3. The minimum number of aircraft required for the entire process of providing air transport services is 03; for general aviation business is 01; and the number of chartered aircraft with aircrews available for use till the end of the second operation year shall not account for more than 30% of an aircraft fleet.

4. Aircraft must have a type certificate granted by the Federal Aviation Administration of the United States (FAA), European Aviation Safety Agency or Aviation Authority of Vietnam.

1. Maintain an organizational machinery having competence in implementing the system for aircraft safety, security management, operations, maintenance, flight training and ground handling activities; product development, marketing and selling of air transport, general aviation services in accordance with laws on civil aviation; payment systems.

2. Appoint the person responsible for the system for aircraft safety, security management and operation, and aircraft maintenance and flight training, who must acquire the minimum of 03 years' continuously working experience related to his/her appointment, and achieve certificates or degrees which are issued or recognized in accordance with laws on civil aviation.

3. Appoint the legal representative of an airline who must be a Vietnamese national.

4. With regard to foreign-invested enterprises, the number of foreign members shall not exceed one third of total membership participating in the management board. The management board shall be composed of:

a) Director General (Director), Deputy Director General (Deputy Director);

b) Chief accountant;

c) Persons taking charge of specific activities, such as safety management system; aircraft operations; aircraft maintenance; aircrew training; ground handling; product development; marketing and selling of air transport services.

1. The minimum amount of capital required for establishment and maintenance of an airline shall comply with the following regulations:

a) With regard to an airline operating up to 10 airplanes, the minimum amount of capital shall be VND 700 billion required for an airline providing international air transport services; VND 300 billion required for an airline only providing domestic air transport services;

b) With regard to an airline operating from 11 to 30 airplanes, the minimum amount of capital shall be VND 1,000 billion required for an airline providing international air transport services; VND 600 billion required for an airline only providing domestic air transport services;

c) With regard to an airline operating up to 30 airplanes, the minimum amount of capital shall be VND 1,300 billion required for an airline providing international air transport services; VND 700 billion required for an airline only providing domestic air transport services.

2. The minimum amount of capital required for establishment and maintenance of a general aviation enterprise shall be VND 100 billion.

3. A foreign-invested airline must conform to the following requirements:

a) Foreign ownership shall not exceed 30% of the charter capital;

b) There is at least one Vietnamese natural or legal entity owning the highest share of charter capital. In cases where a Vietnamese legal entity has foreign investment capital, the foreign share of equity participation shall not exceed 49% of the charter capital of that entity.

4. Transfer of shares, portions of equity participation from airlines that do not have foreign investment capital to foreign investors shall be allowed only after 02 years from the date of issuance of a license for air transport service business.

In order to apply for such transfer, an airline must submit an application for transfer of shares or portions of equity participation to foreign investors to the Civil Aviation Authority of Vietnam, including the following information: transferee investor, transfer conditions, the number of shares, portions of equity participation; aircraft fleet development plans, business plans and developmental strategies, as referred to in Clause 1 Article 9 hereof (where applicable).

Within a maximum of 05 working days of receipt of such application, the Civil Aviation Authority of Vietnam shall submit an evaluation report to the Ministry of Transport.

Within a maximum of 05 working days of receipt of such report, the Ministry of Transport shall consider and send a notification of approval or refusal to applicants and expressly state reasons therefor.

Article 9. Business plans and developmental tactics

1. Business plans and developmental tactics of an airline shall be composed of the followings:

a) Anticipation of market demands and market growth trends;

b) Evaluation of actual status and level of competitiveness of services launched in the market;

c) Tactics for development of air transport products, aircraft fleet, and business development plans for 05 first years from the date of commencement of operations.

2. On the basis of the plan for air transport development approved by the Prime Minister, the Ministry of Transport shall direct the Civil Aviation Authority of Vietnam and airlines to prepare, report and implement the detailed plan on a 5-year regular basis according to the following rule:

a) Conform to the strategy for socio-economic development, tactics, planning or schemes for transport development;

b) Ensure consistency in the development of airports, airdromes, flight operations, transport equipment and resources that assure aircraft operation and maintenance capability of airlines, and safety control competence of aviation competent authorities; environmental protection and sustainable development;

c) Ensure healthy and equal competitiveness between airlines; harmonious development between different categories of air transport services.

Article 10. Procedures for issuance of a license for air transport service business and general aviation business

1. The applicant for a license for air transport service business and general aviation business shall send 01 set of application dossier directly or by post or other equivalents to the Civil Aviation Authority of Vietnam and assume responsibility for accuracy and authenticity of information included in such dossier.

2. The application dossier shall be comprised of the followings:

a) The written request by using the form No. 01 as stipulated in the Appendix hereto;

b) The original copy of the capital confirmation;

c) The enterprise’s organizational machinery;

d) The authenticated duplicate of an appointment decision, employment contract, and the duplicate of a decree or professional certificate of the responsible person referred to in Article 7 hereof;

dd) The agreement in principle or agreement on aircraft purchase, hire-purchase or charter;

e) The enterprise’s charter.

3. Within a maximum of 30 working days of receipt of the stipulated dossier, the Civil Aviation Authority of Vietnam shall submit an evaluation report to the Ministry of Transport.

Where the dossier is invalid, within a permitted period of 03 working days of receipt of that dossier, the Civil Aviation Authority of Vietnam must send a written response to the applicant and provide guidance on improvement of the dossier in accordance with laws and regulations.

4. Within a maximum of 15 working days of receipt of the evaluation report from the Civil Aviation Authority of Vietnam, the Ministry of Transport shall consider and submit that report to the Prime Minister. In case of rejection of such evaluation report, a written response should be sent to the Civil Aviation Authority of Vietnam and clearly state reasons therefor.

5. Within a maximum period of 10 days of receipt of the statement on evaluation results from the Ministry of Transport , the Prime Minister shall consider and make a decision to authorize the Ministry of Transport to grant the license for air transport service business, or general aviation service business.

6. Within a permitted period of 05 working days of receipt of the Prime Minister’s opinion, the Ministry of Transport shall grant the license by using the form No.02 stipulated in the Appendix hereto.

7. Within a maximum period of 05 working days of receipt of the said license, the airline must post such license on 03 consecutive issues of a newspaper.

Article 11. Procedures for re-issuance of a license for air transport service business and general aviation business

1. In case of loss, theft, wear and tear, damage or change in contents of a license for air transport service business and general aviation business, it shall be re-issued.

2. The airline shall submit 01 set of application dossier directly or by post or other equivalents to the Civil Aviation Authority of Vietnam and assume responsibility for accuracy and authenticity of information included in such dossier. The application dossier shall include:

a) The written request prepared by using the form No. 01 as stipulated in the Appendix hereto;

b) Relevant documents related to any change to contents of the license (if any).

3. Procedures for re-issuance of a license due to any change in contents of that license (except for the case referred to in Clause 6 of this Article):

a) Within a maximum of 15 working days of receipt of the stipulated dossier, the Civil Aviation Authority of Vietnam shall submit an evaluation report to the Ministry of Transport;

b) Within a permitted period of 03 working days of receipt of the evaluation report from the Civil Aviation Authority of Vietnam, the Ministry of Transport shall re-issue a license by using the form No.02 stipulated in the Appendix hereto.

4. Procedures for re-issuance of a license because of loss, wear and tear or damage:

a) Within a maximum of 03 working days of receipt of the stipulated dossier, the Civil Aviation Authority of Vietnam shall report to the Ministry of Transport;

b) Within a permitted period of 02 working days of receipt of the report from the Civil Aviation Authority of Vietnam, the Ministry of Transport shall consider re-issuing a license by using the form No.02 stipulated in the Appendix hereto.

5. The re-issued license must include regulations on elimination of any license which has been lost, torn, damaged or changed in terms of its contents. In case of refusal of reissuance, the Ministry of Transport shall notify the Civil Aviation Authority of Vietnam that will send a written response to the applicant, stating reasons therefor.

1. A license for air transport service business and general aviation business shall be invalidated and eliminated in the following cases:

a) Fail to meet capital adequacy requirements during operations;

b) Intentionally falsify information included in the application dossier;

c) Pend air transport services that must be commenced within a permitted period of 18 months from the date of issuance of a license;

d) Cease air transport service operations for a consecutive period of 12 months;

dd) Fail to apply for an air operator’s certificate within a permitted period of 18 months from the date of issuance of a license;

e) Have an air operator’s certificate which is revoked or eliminated for a period of more than 12 months, and is not re-issued;

g) Misuse contents stated in a license;

h) Deliberately breach regulations laid down in Clause 4 Article 8, Clause 2 Article 9 and Clause 7 Article 10 hereof;

i) Commit serious violations against laws on national security and defence;

k) Commit serious violations against laws on aviation security, safety, organizational machinery for administration and operation of air transport and general aviation services;

l) Terminate operations according to laws or upon the request of an airline;

m) No longer meet licensing requirements in accordance with laws.

2. In case of a license subject to invalidation or elimination, the Ministry of Transport shall grant a decision on elimination of that license and an airline must immediately put an end to its air transport operations.

3. Organizations or individuals shall be entitled to obtain re-issued licenses after 01 year from the date of elimination or invalidation of their licenses.

1. The Minister of Transport shall consent to the policy on investment in airport or airdrome business with respect to establishment of an airport enterprise, transfer of shares, portions of equity participation held by an airport enterprise to a foreign investor.

2. A license for airport or airdrome business shall be granted if requirements stated in Article 14 hereof are satisfied.

Article 14. Eligibility requirements for issuance of a license for airport business

1. Have business plans and developmental tactics which include the followings:

a) Staff members must achieve appropriate licenses or certificates and comply with professional requirements concerning airport operations in accordance with laws on civil aviation;

b) Necessary equipment or facilities must be provided to ensure aviation safety and security in accordance with laws on civil aviation.

2. Conform to capital requirements as follows:

a) The minimum level of capital required for establishment and maintenance of an airport enterprise with respect to domestic airport business shall be VND 100 billion; with respect to international airport business shall be VND 200 billion;

b) Foreign ownership shall not exceed 30% of the charter capital.

Chapter IV

AIR SERVICE BUSINESS

Article 15. Eligibility requirements for airport or airdrome service business

1. Airport or airdrome services shall include:

a) Passenger terminal operation services;

b) Airfield operation services;

c) Air cargo terminal or warehouse operation services;

d) Aviation fuel supply services;

dd) Ground engineering and commercial services;

e) Airline catering services;

g) Aviation equipment repair and maintenance services;

h) Aviation engineering services;

i) Aviation security services.

2. Air service enterprises shall be entitled to provide air services referred to in Clause 1 of this Article after obtaining the license for airport or airdrome service supply, unless otherwise stipulated by Clause 3 and 4 of this Article.

3. Airfield operation services shall be provided by airport enterprises or any organization in the exercise of authority delegated by the Ministry of Transport to manage airport infrastructure.

4. Aviation security services shall be provided by the aviation security control force which is organized in accordance with Article 195 of the Law on Vietnam Civil Aviation.

1. Conform to the detailed plan of an airport, airdrome, and correspond with the capacity of airport or airdrome infrastructure.

2. An enterprise applying for a license for airport, airdrome service business must satisfy the following requirements:

a) Have its organizational machinery that ensure that supply of relevant airport, airdrome services complies with legislative regulations on civil aviation;

b) Employ staff members that achieve appropriate licenses or certificates and comply with professional requirements concerning airport, airdrome operations in accordance with laws on civil aviation;

c) Conform to technical requirements, regulations and standards concerning aviation safety and security, fire and explosion prevention, and environmental protection in accordance with laws on civil aviation and other relevant laws;

d) Satisfy requirements concerning capital as stipulated by Article 17 hereof.