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Indochina Airlines suspends service, seeking funding
Indochina Airlines Joint Stock Comapny, the first private airline to run flights in Vietnam, suspended service and is seeking more funding by November to resume operations after the government revoked its traffic rights.
“If we are unable to raise more funding before November, we may have to file for bankruptcy,” Le Hong Pho, Managing Director of the Hanoi-based airline said by telephone. The company is currently calling for investment, he said, declining to comment on how much money he was seeking.
The global airline industry suffered the biggest decline in passenger demand last year because of the worst recession in six decades, the International Air Transport Association said last month. The slump has driven Japan Airlines Corp. to file for bankruptcy protection and caused losses at Singapore Airlines Ltd. and British Airways Plc.
Indochina Airlines, which ran its first flight in November 2008, owes almost VND30 billion (US$1.6 million) for jet fuel and services, and has been unable to operate its sole plane since November, according to Vo Huy Cuong, Head of the Civil Aviation Administration of Vietnam.
“We understand that Indochina Airlines had financial problems due to last year’s financial crisis, but we had to revoke its traffic rights after it failed to repay debt and operate its plane,” Cuong said by telephone this week.
The carrier’s air operator certificate will expire in May and its business license will be revoked if operations aren’t resumed before November 1, he said.
Airline support
Vietnam is trying to support private airlines, and is giving the carrier more time to resolve its financial problems, Cuong said. Indochina Airlines was the second private airline to be licensed in the country after Vietjet Aviation Joint Stock Comapny, although Vietjet hasn’t started flights yet.
Airlines in the world will probably post losses totaling $5.6 billion this year, according to estimates by IATA. That’s about half of 2009’s estimated $11 billion deficit. More airlines will go bankrupt, said Giovanni Bisignani, IATA’s chief executive. About 34 carriers have gone out of business since 2008, according to IATA.
Indochina Airlines, which operated between Hanoi, Ho Chi Minh City and Da Nang, is refunding customers, Pho said.
Jetstar Pacific Airlines Joint-Stock Aviation Company, 27 percent owned by Sydney-based Qantas Airways Ltd., is now the only provider of domestic flights in the country apart from state-owned carrier Vietnam Airlines Corp.
thanhnien, Bloomberg
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