Setting a business in Vietnam for airline ticket trading

Along with the development of the economy and society, airline are increasingly becoming a popular and safe means of passenger transport. In that context, air ticket sales companies were born, acting as a bridge between customers and airlines. However, the business of selling airline tickets is one of the conditional businesses regulated by law. Therefore, businesses need to meet the conditions for setting a business in Vietnam for airline ticket trading, which is presented in this article below by Viet An Law.

Legal basis

• Law on Commercial 2005.
• Law on Enterprise 2020.

What is an airline ticket sales company?

An airline ticket company is essentially an airline ticket sales agency that conducts transactions and sells airline tickets when customers need to buy tickets but do not need to go directly to the airline to buy. It can be understood that air ticket companies are authorized units to sell tickets directly from the airline and are granted the right to sell air tickets from the airline’s website at competitive prices.

For a company that sells airline tickets, the product being sold will be airline tickets provided by airlines to distribute to the market to meet customers’ needs for using flight services. Companies that sell airline tickets will often act as agents for many different airlines.

Conditions for setting a business in Vietnam for airline ticket trading

It can be seen that the current Enterprise Law 2020 allows any individual or organization to have the right to establish an airline ticket selling business. However, according to Clause 2, Article 17 of the Enterprise Law 2020, the law also prohibits the following entities from establishing and managing enterprises, including:

• Officials, civil servants, and officers in the military are prohibited from establishing businesses to prevent corruption, and unfair competition, and prevent negative risks to their positions and public duties.
• Individuals who are restricted or have their citizenship rights revoked.
• Organizations use allocated state budget resources for the wrong purpose, to create private or group benefits.

Basically, the company selling airline tickets will be the commercial agent for the airlines. Therefore, according to the Commercial Law 2005, the commercial agency is an activity to make a profit whereby the principal and the agent will agree for the agent to purchase on their behalf, sell goods to the principal, or provide the principal’s services to customers to receive remuneration.

Therefore, for each airline when signing an agency contract with an airline ticket selling company, there will be requirements for specific conditions in the agency contract. These conditions will depend entirely on the airline, as long as they do not violate the law.

Clients can refer to some common conditions that airlines in Vietnam require an airline ticketing company to meet before becoming their agent below:

• Register to establish a company with business registration and a certain amount of charter capital. The specific amount of charter capital will be determined by each airline.
• The company must contribute capital to the airlines. Normally, an airline will require the airline ticketing company to have a deposit capital ranging from 200,000,000 VND to 2,000,000,000 VND. After making a deposit, the airline will provide the company with an account to perform booking, reservation, and ticket issuance operations on the airline.
• The company must have bank guarantee documents to present to airlines.
• Many airlines may also require air ticket sales companies to make commitments related to monthly, quarterly, and annual sales levels.
• The company must also have a suitable office or business premises that meets the specific conditions required by the airline code.
• Airline ticket sales companies must have a suitable team of bookers, consultants, accountants, human resources, marketing… to be able to operate effectively.

Therefore, the conditions for setting a business in Vietnam for airline ticket trading will include general conditions to establish a legal business and specific conditions for each different airline company. A company selling airline tickets needs to meet both of these conditions so that the business can operate following the law.

Market access conditions for foreign investors

In Vietnam’s schedule of service commitments in the WTO, the aviation product sales and marketing services group stipulates the mode of commercial presence: Foreign airlines are allowed to provide services in Vietnam through ticket offices or agents in Vietnam. Regarding the method of presence of natural persons, Vietnam has not made any commitments, except for general commitments.

Procedures for setting a business in Vietnam for airline ticket trading

Step 1: Prepare documents to establish a ticket selling company

The dossier to establish an airline ticket sales company will include the following documents:

• Application for business registration;
• Charter of the company;
• List of capital contributing members in the case of a partnership or multiple-member limited liability company or list of founding shareholders in the case of a joint stock company;
• Notarized or authenticated copies of legal documents of the legal representative of the enterprise, members or founding shareholders, and legal documents of the organization in case the members or shareholders are the organization;
• Notarized or authenticated copy of the Investment Registration Certificate in case of participation in the establishment by foreign investors or economic organizations with foreign investment capital;
• Authorization document for the person to carry out registration procedures to establish an airline ticket sales company at the Department of Planning and Investment.

Step 2: Applying and paying the business information disclosure fee

After fully preparing the above documents, Viet An Law Firm will proceed to apply for an Enterprise Registration Certificate through the National Business Registration Portal.

In case the dossier is complete and valid, the company will receive an Enterprise Registration Certificate within 3 working days.

Step 3: Service for post-established business

After obtaining the Enterprise Registration Certificate, the airline ticket sales company performs the following tasks:

• Engraving the company seal: The company contacts the seal engraving unit to engrave the company’s seal. The company will have the right to decide the type of seal, quantity, form, and content of the seal.
• Hanging signs at the company headquarters: Contact the airline ticketing company to order a company sign with full information related to name, address, business code, and phone number…, and hang the company sign at the registered headquarters.
• Proceed with notification of invoice issuance: To create legality of invoices, air ticket companies need to carry out procedures for notification of invoice issuance to competent state agencies. If allowed, the airline ticketing company may print or order invoices for proper use or may purchase invoices for use instead of printing.
• Declare and pay taxes: After establishing an airline ticket sales company, the company needs to declare and pay taxes in full. Taxes include:
  • Corporate income tax;
  • Value added tax;
  • License tax.

Step 4: Contact airlines to sign 1-level airline ticket agent contracts.

To be able to sign an airline ticket agency contract, the airline ticketing company needs to clearly understand the conditions to be able to act as an airline ticket agency for each specific airline.

If you have any other questions related to the conditions for setting a business in Vietnam for airline ticket trading in particular and other types of businesses in general, please contact Viet An Law Firm for support!