With a possible nod of Prime Minister, domestically-invested Kite Air airline would start commercial operation in the second quarter of 2020, local media reported.

Illustrative photo.

The Ministry of Planning and Investment (MPI) has completed the appraisal process of the airline's dossiers and submitted them to Prime Minister Nguyen Xuan Phuc for approval.

With an investment of VND5.5 trillion (US$236.72 million), including VND4.5 trillion (US$193.67 million) in loans, Kite Air, owned by Thien Minh Aviation Company, would operate six ATR72 aircraft in the first year of operation.

The airline plans to add A320/A321 Airbus airplanes in the third year and gradually to build a fleet of 25 aircraft by 2025, of which 15 would be A320/A321.

According to the airline's business plan, its net present value (NPV) after 2025 is estimated at US$27.74 million, while the internal rate of return (IRR) would reach 17.8% annually with a five-year payback period. The airline is projected to be profitable in 2023.

Additionally, the airline would contribute US$430 million for airport services in the next five years and VND800 billion (US$34.42 million) in corporate and environmental protection taxes.

Kite Air said with ATR72, it targets to be a budget airline with a focus on domestic routes, aiming to serve passengers in localities with underdeveloped aviation infrastructure such as Dien Bien, Ca Mau, Kien Giang, and Con Dao.

To date, the MPI has completed appraisal processes for three airline projects which are Vietravel Air, Vinpearl Air and Kite Air. All the three are subject to the PM’s approval.

Previously, Vice Minister of Transport Le Anh Tuan said the Ministry of Transport supports the establishment of Kite Air as room remains large for airlines utilizing small airports, meeting Vietnam’s huge transport demands.

Vietnam currently has five operational airlines, including Vietnam Airlines, budget operator Jetstar Pacific Airlines (partly owned by Vietnam Airlines), budget carrier Vietjet Aviation, Vietnam Air Services (VASCO) and Bamboo Airways, which flew for first time last January.