The Government has turned down a Ministry of Transport proposal to license a new air carrier, Vietstar Airlines, saying it has yet to meet the requirements provided in Government Decree 30/2013-CP on air transport services.

Deputy Prime Minister Trinh Dinh Dung has told the ministry to comply with Decree 30 concerning its proposal for licensing Vietstar Airlines Multirole Corporation. The proposed airline does not meet the chartered capital requirement as specified by the decree.

The decree sets the minimum chartered capital requirement at VND700 billion (US$31.2 million) for an airline that operates 10 aircraft on domestic and international routes. However, by end-2015, Vietstar Airlines had a total of VND625.7 billion.

The chartered capital, according to the decree, must be held in an escrow account at a bank and a bank confirmation of escrow account must be enclosed with the license application file sent to the Ministry of Transport and the Ministry of Finance for appraisal. This is a strict requirement for the civil aviation industry.

However, the Ministry of Transport said the application file was complete when it was passed to the Government for approval. The capital confirmation issued by the HCMC Department of Planning and Investment and enclosed with the application dossier was not considered a replacement for that issued by a bank.

The Finance Ministry told the Government that such a confirmation was not in line with the Government’s regulations.

Vietstar Airlines had chartered capital of VND400 billion (US$17.8 million) in 2014 and planned to operate a fleet of three Boeing 737s or Airbus 320s.