Conditions for establishing an airline ticket company in Vietnam

Along with the development of the socio-economy, sewing machines are increasingly becoming a popular and safe means of passenger transport. In that context, airline ticket companies were born, acting as a bridge between customers and airlines. However, airline ticket business is one of the conditional business lines prescribed by law. Therefore, businesses need to meet the conditions for establishing an airline ticket company to be able to operate in this field.

Legal basis

• Commercial Law 2005.
• Enterprise Law 2020.
• Vietnam’s WTO schedule of service commitments.

Airline ticketing company concept in Vietnam

An airline ticket company is actually an airline ticket agency that makes transactions and sells airline tickets when customers want to buy tickets but do not need to go directly to the garment company to buy. It can be understood that airline ticket companies are authorized to sell tickets directly from airlines and are granted the right to sell airline tickets from the website of the garment company at competitive prices.

For airline ticket companies, the product to be traded will be airline tickets provided by airlines to distribute to the market to meet the needs of customers to use flight services. And in fact, airline ticket companies will often act as agents for many different airlines.

Conditions for establishing an airline ticket company in Vietnam

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

• Military cadres, civil servants and officers are prohibited from establishing enterprises in order to prevent corruption, combat unfair competition, and prevent negative risks to their positions and public duties.
• Individuals who are in a period of restriction or deprivation of citizenship
• Organizations use state budget sources allocated for wrong purposes, in order to create their own interests and group interests.

Basically, the airline ticket company will be the commercial agent for the airlines. Therefore, according to the 2005 Commercial Law, a commercial agency is an activity with the purpose of making profits whereby the principal and the agent will make an agreement for the agent to buy and sell goods on their own behalf to the principal or provide services of the principal to customers for remuneration.

Therefore, for each airline when signing an agency contract with an airline ticket company, there will be requirements for specific conditions in the agency contract. These conditions will be entirely up to the airline, as long as they are not contrary to the law.

You can refer to some common conditions of airlines in Vietnam that a ticket company must meet before becoming their agent that we present below:

• Must register the establishment of a company with business registration and a certain charter capital. Specifically, the amount of charter capital will depend on each airline.
• The company must make a marginal capital contribution to airlines. Usually, an airline will require the company to sell airline tickets with a margin capital ranging from VND 200,000,000 to VND 2,000,000,000. After depositing, the airline will proceed to provide the company with an account to be able to book, reserve and issue airline tickets on the airline.
• The company must have bank guarantee documents to present to the airlines.
• Many airlines may also require airline ticketing companies to make commitments related to monthly, quarterly and yearly sales levels.
• The company must also have appropriate offices or business premises, meeting the specific conditions required by the airline.
• The airline ticket company must have a team of bookers, consultants, accountants, human resources, marketing … suitable to be able to operate effectively.

Thus, the conditions for establishing an airline ticket company will include general conditions to be able to establish a legal business and separate conditions for each different airline. Airline ticket companies need to meet both of these conditions in order for the business to operate in accordance with the law.

Market access conditions of foreign investors in Vietnam

In Vietnam’s WTO schedule of service commitments, the subgroup of services for sale and marketing of aviation products stipulates the mode of commercial presence: Foreign airlines are allowed to provide services in Vietnam through their ticketing offices or agents in Vietnam. With regard to the mode of presence of natural persons, Vietnam has not committed, except for general commitments. In addition, foreign investors can do business in selling airline tickets in the form of: booking and reservation services by computer. There are currently no restrictions on this form under WTO commitments.

Procedures for establishing an airline ticket company

Step 1: Prepare documents for establishing an airline ticket company

The application for establishment of an airline ticket company will include the following documents:

• Application for business registration
• The company’s charter
• List of capital-contributing members, in case it is a partnership or limited liability company with 2 or more members, or a list of founding shareholders, for a joint-stock company
• Notarized or certified copies of legal papers of the legal representative of the enterprise, founding members or shareholders, legal papers of the organization in case the member or shareholder is an organization
• Notarized or certified copy of the Investment Registration Certificate in case of participation established by foreign investors or foreign-invested economic organizations
• Written authorization for the person to carry out procedures for registration of the establishment of an airline ticket company at the Department of Planning and Investment

Step 2: Submit the application to establish an airline ticket company and pay the business information disclosure fee

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

In case the application is complete and valid, the company will receive the business registration certificate within 3 working days.

Step 3: Perform other tasks after being granted the business registration certificate

After obtaining the business registration certificate, the airline ticket company performs the following tasks:

• Proceed to engrave the company seal: The company contacts the seal engraving unit to engrave the seal of its company. The company will have the right to decide on the type of seal, quantity, form as well as the content of the seal.
• Hang a sign at the company’s headquarters: The airline ticket company contactes, orders the company’s sign with all information related to name, address, business code, phone number …, and hangs the company sign at the registered head office.
• Notification of invoice issuance: In order to create legitimacy of invoices, airline ticket companies need to carry out procedures for notifying invoice issuance to competent state agencies. When permitted, the airline ticket company can print or order invoices to be used for the right purpose or can buy invoices to use instead of printing.
• Proceed to declare and pay taxes: After establishing an airline ticket company, the company needs to declare as well as pay taxes in full. Taxes include:
• Corporate income tax
• Value Added Tax
• License tax

Step 4: Contact the airlines to sign the airline ticket agency contract level 1

In order to be able to sign an airline ticket agency contract, the airline ticket company needs to know the conditions to be able to be an airline ticket agent for each specific airline.

If you have any other questions related to the conditions for establishing an airline ticket company in particular and other types of businesses in general, please contact Viet An Law Firm for support!