Overview of the Vietnamese aviation market and joint venture trends

The aviation industry is a key driver of tourism, trade, and international connectivity. With its favorable geographical location in Southeast Asia, Vietnam is becoming a regional hub.

• In 2024, passenger traffic through airports reached 109 million, nearly matching pre-pandemic levels.
• Of these, 41 million were international passengers, a 26% increase compared to the previous year.
• There were68 million domestic passengers, a slight decrease due to fleet restructuring and the trend of traveling abroad.

Currently, the Vietnamese aviation market includes many domestic airlines such as Vietnam Airlines, Vietjet Air, Bamboo Airways, and Vietravel Airlines. In addition, many international airlines are also operating flights to Vietnam, creating a vibrant competitive market.

Joint ventures in the aviation industry are becoming increasingly common, not only in air transport but also in ancillary services such as ground handling, technical maintenance, human resources training, and catering. These joint ventures provide opportunities to access investment capital, advanced technology, and management experience from foreign partners, while helping Vietnamese businesses expand their markets and enhance their competitiveness.

The importance of joint ventures in the development of the aviation industry

Joint ventures play an important role in the development of Vietnam’s aviation industry for the following reasons:

• Mobilizing financial resources: The aviation industry requires large investments in infrastructure, aircraft fleets, and technology. Through joint ventures, businesses can mobilize capital from multiple parties, reducing financial pressure and sharing investment risks.
• Technology and experience transfer: Foreign partners often possess advanced technology and professional management experience. Joint ventures facilitate the transfer of these elements, helping to improve the capabilities and operational efficiency of Vietnamese companies.
• Expanding networks and markets: Through joint ventures with international airlines, Vietnamese companies have the opportunity to expand their flight networks, access new markets, and strengthen their competitiveness in the international market.
• Improving service quality: Cooperation with reputable and experienced partners helps improve service quality, better meeting passenger needs and expectations.
• Promoting healthy competition: The presence of international joint ventures contributes to a healthy competitive environment, promoting innovation and development across the industry.

Current challenges and opportunities (2025)

Challenges:

• Complex legal framework: Despite many improvements, the legal framework for joint ventures in the aviation industry still has many complex and sometimes overlapping regulations, causing difficulties for investors.
• Limits on foreign ownership: Regulations limiting foreign ownership in aviation enterprises (no more than 34% of charter capital for airlines) may restrict the level of participation by foreign investors.
• Increased competition: The growing number of airlines and the intensity of competition in Southeast Asia put significant pressure on companies in the industry.
• Aviation safety and security requirements: Increasingly stringent aviation safety and security standards require substantial investment in technology and human resources.

Opportunities:

• Potential market: Vietnam is one of the fastest-growing aviation markets, with strong growth projected to continue in the coming years.
• Improved infrastructure: Airport development and upgrade projects such as Long Thanh, Noi Bai, and Tan Son Nhat open up new investment opportunities in many related fields.
• International integration: Vietnam’s participation in numerous free trade agreements (FTAs) and aviation agreements facilitates international cooperation.
• Digital transformation: The trend of digital transformation in the aviation industry opens up opportunities for joint ventures in the field of technology and digital services.

Legal framework for aviation joint ventures in Vietnam

Investment Law and regulations related to foreign investment in the aviation sector

The legal framework for foreign investment in the aviation sector in Vietnam is governed by several legal documents, the most important of which are:

• Investment Law 2020 (Law No. 61/2020/QH14): General regulations on investment and business activities in Vietnam, including forms of investment, investment procedures, and the rights and obligations of investors. This law defines aviation as a conditional business and imposes restrictions on foreign investors.
• Decree No. 31/2021/ND-CP: Provides detailed guidance on the Investment Law, specifying conditions for investment in conditional business sectors, including aviation.
• Decree No. 89/2019/ND-CP: Amends and supplements a number of articles of Decree No. 92/2016/ND-CP on conditional business lines and occupations in the field of civil aviation.
• List of industries with restricted market access for foreign investors: Specific regulations on restricted sectors and market access conditions for foreign investors in the aviation industry.

Under current regulations, air transport is classified as a conditional business sector and is subject to restrictions on foreign investors. This means that foreign investors wishing to participate in this sector must meet specific conditions and comply with restrictions on capital ownership ratios.

Vietnam Civil Aviation Law and regulations on business cooperation

The Vietnam Civil Aviation Law (Law No. 66/2006/QH11, amended and supplemented in 2014 and 2019) is an important legal document regulating civil aviation activities in Vietnam. Some provisions related to joint ventures include:

• Conditions for granting an Air Transport Business License: Regulations on capital, aircraft fleet, organizational structure, personnel, and other conditions for obtaining an Air Transport Business License.
• Regulations on Aircraft Operator Certificates (AOC): Conditions and procedures for obtaining an AOC – a mandatory license for an airline to operate commercial flights.
• Regulations on joint ventures: Regulations on the conclusion and implementation of joint venture contracts in the aviation sector, including code sharing, charter flights, and aircraft leasing.

In addition, there are Circulars of the Ministry of Transport detailing the conditions and procedures for granting Air Transport Business Licenses and Air Operator Certificates.

Limits on foreign capital ownership in aviation enterprises

One of the important regulations affecting the establishment of joint ventures in the aviation industry is the limit on foreign capital ownership. Specifically:

• For airlines: The capital contribution ratio of foreign investors shall not exceed 34% of the charter capital of Vietnamese airlines.
• For aviation service providers: The capital contribution ratio of foreign investors shall not exceed 49% of the charter capital for ground service providers.
• For other auxiliary service providers: Depending on the type of service, the limit on foreign capital contribution may vary, ranging from 49% to 100%.

Regulations on foreign capital ownership limits aim to ensure Vietnam’s control over enterprises operating in the aviation sector, which is considered important to national security.

Legal documents related to the management and operation of aviation joint ventures

In addition to the main legal documents mentioned above, the management and operation of aviation joint ventures are also governed by many other legal documents:

• Enterprise Law 2020 (Law No. 59/2020/QH14): Regulates the establishment, management organization, reorganization, and dissolution of enterprises, including joint ventures.
• Competition Law 2018 (Law No. 23/2018/QH14): Regulates anti-competitive conduct and economic concentration (including mergers, consolidations, acquisitions, and joint ventures) that may have or are likely to have a significant anti-competitive impact on the Vietnamese market.
• Intellectual property regulations: Protect intellectual property rights in joint ventures, particularly trademarks, copyrights, and technological know-how.
• Labor law: Regulations on recruitment, training, and employment in foreign-invested enterprises.
• Tax laws: Regulations on tax obligations, tax incentives, and issues related to transferring profits abroad.
• Foreign exchange laws: Regulations on foreign exchange management for foreign direct investment activities.

The diversity and complexity of the legal framework requires joint venture participants to thoroughly research and fully comply with legal regulations to ensure effective and sustainable business operations.

Procedures for establishing an aviation joint venture in Vietnam

Investment licensing procedures

The process of applying for an investment license for an aviation joint venture in Vietnam includes the following main steps:

• Step 1: Negotiate and sign the joint venture agreement
  • The partners negotiate and agree on the basic terms of the joint venture.
  • Sign a Memorandum of Understanding (MOU) or a preliminary joint venture agreement (JVA).
• Step 2: Prepare the investment project proposal
  • Develop a detailed investment project proposal, including objectives, scale, location, investment capital, implementation schedule, technology used, and other content as required.
  • Prepare documents proving the financial capacity and experience of the parties involved in the joint venture.
• Step 3: Submit the application for an Investment Registration Certificate
  • Submit the dossier to the investment registration agency (usually the Department of Planning and Investment of the province/city where the project is implemented or the Management Board of the Industrial Park or Export Processing Zone).
  • For investment projects in the aviation sector, an assessment opinion from the Ministry of Transport is required, and approval of the investment policy by the Prime Minister may be necessary.
• Step 4: Review the application and issue the Investment Registration Certificate
  • The investment registration agency reviews the dossier and obtains opinions from relevant agencies.
  • After completing the review process, if the project meets all conditions, the investment registration agency will issue an Investment Registration Certificate.

The processing time for investment dossiers in the aviation sector is usually longer than in other sectors due to the specific nature and strict review requirements of the industry.

Business registration process and specialized licenses

After obtaining the Investment Registration Certificate, the aviation joint venture must proceed with business registration and apply for specialized licenses:

• Step 1: Register the establishment of the enterprise
  • Prepare the business registration dossier in accordance with the Law on Enterprises.
  • Submit the dossier to the Business Registration Office under the Department of Planning and Investment.
  • Once the dossier is approved, the enterprise will be issued a Business Registration Certificate.
• Step 2: Apply for an Air Transport Business License (for airlines)
  • Prepare the application dossier in accordance with the Decree on Air Transport Business and Conditions.
  • Submit the application to the Civil Aviation Authority of Vietnam.
  • The Civil Aviation Authority of Vietnam will review the application and submit it to the Minister of Transport for consideration and decision.
• Step 3: Apply for an Air Operator Certificate (AOC)
  • Prepare the dossier in accordance with regulations, including documents on the aircraft fleet, organizational structure, personnel, operational documents, safety and security programs, etc.
  • Submit the application to the Civil Aviation Authority of Vietnam.
  • The Civil Aviation Authority of Vietnam will review the application, conduct an on-site inspection, and issue the AOC if all conditions are met.
• Step 4: Apply for other specialized licenses (depending on the type of service)
  • For ground services: License to provide aviation services at airports.
  • For technical maintenance services: Aircraft maintenance organization certificate.
  • For training services: License for aviation training and instruction facilities.

Approval authority of state agencies

Approval authority for aviation joint ventures is delegated as follows:

• Prime Minister: Approves investment policies for investment projects in the field of air transport, projects with an investment capital of VND 5,000 billion or more, or projects that have a significant impact on the environment or have the potential to seriously affect the environment.
• Ministry of Planning and Investment: Appraises projects under the Prime Minister’s authority to approve investment proposals.
• Ministry of Transport: Appraise and provide opinions on investment projects in the field of aviation; issue Air Transport Business Licenses.
• Vietnam Aviation Administration: Appraises applications for air transport business licenses; issues Air Operator Certificates (AOC) and other specialized licenses.
• Provincial People’s Committee: Approves investment policies for certain projects according to decentralization.
• Department of Planning and Investment: Issues investment registration certificates for projects not subject to investment policy approval; issues business registration certificates.

Conditions for foreign investors

Foreign investors wishing to participate in an aviation joint venture in Vietnam must meet the following conditions:

• Conditions regarding capital ownership ratio: Comply with limits on foreign capital ownership ratio (no more than 34% for airlines, no more than 49% for ground services).
• Financial capacity requirements: Demonstrate sufficient financial capacity to implement the investment project. For airlines, the minimum charter capital must meet the provisions of the Decree on business and business conditions for air transportation.
• Experience requirements: Have experience in the aviation sector or related fields, particularly for key management and technical positions.
• Security and defense conditions: The investment project must not negatively impact national security, defense, order, or social safety.
• Environmental conditions: Comply with environmental protection regulations and have appropriate solutions to minimize negative impacts on the environment.
• Governance and personnel conditions: Ensure that key management positions (such as Chairman of the Board of Directors, General Director) are held by Vietnamese nationals for airlines.

Fully meeting these conditions not only helps foreign investors in the licensing process but also creates a solid foundation for the sustainable development of the joint venture in the future.

Common aviation joint venture models

Joint ventures in air transport services

Joint venture models in air transport services typically include:

• Joint venture airline: This is a joint venture between a Vietnamese airline and a foreign airline to establish a new airline operating in Vietnam. However, due to the foreign ownership limit of no more than 34%, the Vietnamese partner always retains control.
• Codeshare cooperation: This is a common form of business cooperation between airlines, in which one airline operates a flight but allows another airline to sell tickets on that flight under its own code. This model helps expand the route network without the need to invest in a fleet of aircraft.
• Airline alliances: Vietnamese airlines can join global airline alliances such as Star Alliance, SkyTeam, or Oneworld, facilitating comprehensive cooperation in areas such as networks, frequent flyer programs, ground services, and other fields.
• Cooperation in cargo transportation: Joint ventures specializing in cargo transportation leverage the participating parties’ advantages in network, infrastructure, and experience in air logistics.

Joint ventures in ground and ancillary services

Joint venture models in ground and auxiliary services include:

• Ground handling services: Joint ventures providing services such as passenger handling, baggage handling, aircraft handling at the apron, and ground transportation within the airport area. Foreign partners are often companies with international experience in this field, such as SATS, Swissport, and Menzies Aviation.
• Airline catering services: Joint ventures specializing in providing meals for airlines, combining international standards with local culinary characteristics.
• Aviation fuel services: The joint venture provides aircraft refueling services at airports.
• Duty-free shop services: The joint venture operates duty-free shops at international airports, combining international brands and local products.

Joint ventures in aviation training and maintenance

The field of aviation training and technical maintenance is also a potential area for joint ventures:

• Pilot and flight attendant training centers: Joint ventures between Vietnamese airlines and international aviation training organizations to establish training centers for pilots, flight attendants, and technical staff, helping to reduce training costs abroad and improve the quality of human resources.
• Aircraft maintenance and repair facilities (MRO): Joint ventures between Vietnamese airlines and aircraft manufacturers or international MRO companies to establish aircraft maintenance and repair facilities in Vietnam, serving not only the domestic market but also expanding to the region.
• Simulator Training Center: Joint ventures investing in modern simulators for pilot training and periodic training.

Other forms of business cooperation

In addition to traditional joint venture models, there are other forms of business cooperation in the aviation industry:

• Aviation technology development cooperation: Joint ventures between technology companies and aviation enterprises to develop technological solutions for the industry, such as flight management systems, mobile applications, and e-commerce solutions for aviation.
• Joint ventures for aviation infrastructure development: Cooperation between domestic and foreign investors to develop and operate airport facilities, such as passenger terminals, cargo terminals, or ancillary facilities.
• Aviation tourism promotion cooperation: Joint ventures between airlines and travel agencies, hotels to develop integrated tourism packages, promoting the number of tourists coming to Vietnam by air.
• Joint ventures in the field of air logistics: Cooperation between airlines and logistics companies to provide integrated door-to-door cargo transportation services.

Each joint venture model has its own characteristics and requires an appropriate development strategy. However, all aim to leverage the strengths of the participating parties, enhance business efficiency, and contribute to the overall development of Vietnam’s aviation industry.

Aviation Legal Consulting Services from Harley Miller Law Firm

Harley Miller Law Firm is proud to be a specialized aviation law firm in Vietnam, providing comprehensive legal consulting services to domestic and international businesses seeking business cooperation opportunities in the aviation industry.

Our specialized legal services include:

• Aviation joint venture formation consulting: Support in assessing feasibility, selecting appropriate legal structures, and designing effective corporate governance models for joint ventures in the aviation industry.
• Legal support during the licensing process: Representing clients in working with state management agencies such as the Ministry of Transport and the Civil Aviation Authority of Vietnam to apply for aviation business licenses and related certificates.
• Drafting and negotiating contracts: Preparing and negotiating important legal documents including joint venture agreements, shareholder agreements, technology transfer agreements, and other commercial agreements.
• Legal compliance consulting: Ensuring business operations fully comply with Vietnamese and international laws on aviation, competition, foreign investment, and environmental protection.
• Dispute resolution: Representing clients in disputes related to aviation joint ventures, including negotiation, mediation, arbitration, and litigation.

With a team of lawyers specializing in aviation law and experience advising on many successful joint venture transactions, Harley Miller Law Firm is committed to providing comprehensive, practical, and effective legal solutions to help clients overcome legal challenges and maximize business opportunities in Vietnam’s aviation industry.

For more information, please contact:

Harley Miller Law Firm

Address: HM Town Building, 412 Nguyen Thi Minh Khai Street, District 3, Ho Chi Minh City

Email: [email protected]

Phone: (+84) 937215585

Website: https://luatminhnguyen.com