Vietnam is reviewing a draft proposal to increase the foreign ownership cap for its domestic airlines from 34 percent to 49 percent. The move aims to attract more foreign investment, bolster the airlines' financial stability, and facilitate access to advanced technology and management expertise from international partners, according to reports from Dau Tu newspaper citing the draft document from the Construction Ministry. The proposal also seeks to align Vietnam's airline regulations with commitments under its free trade agreements.
Vietnam currently has seven airlines, including the national carrier Vietnam Airlines and budget airline Vietjet. The draft emphasizes that the proposed change would help these airlines enhance their competitiveness and operational capabilities. The government stated that local carriers have had to reduce operations due to rising jet fuel costs induced by geopolitical conflicts, mainly the Iran war. As a result, authorities plan to further adjust airline operations to optimize expenses.
The impact of rising fuel costs
The rise in jet fuel prices by 88 percent since late February has significantly impacted airlines’ operational costs. The government announced that local airlines will continue to modify their activities to manage costs better, while the ongoing geopolitical tensions contribute to fuel price volatility. The draft is under review, and if approved, the increased ownership limit could foster more foreign partnerships within Vietnam's aviation sector.
