A new Memorandum of understanding between Australia and Vietnam 1

A new Memorandum of Understanding (MOU) between Australia and Vietnam signed on February 11 increases by 3300 seats per week the capacity available to Australian and Vietnamese airlines to operate between the two countries.

1. The traffic rights that will be involved after a new memorandum of understanding between Australia and Vietnam of increasing the capacity available by 3300 seats per week for Australian and Vietnamese airlines to operate between the two countries has been signed are, the 1st freedom right, the 2nd freedom right, the 3rd   freedom right, the 5th freedom right, the 4th freedom right and the 7th freedom right.

2.  Before an airline can fly out of a certain country or in a certain country, it needs approval of various countries or governments even if it will overfly and not land. There are freedom rights that allow airlines to provide services over specific places according to Transportation journal, (2010). The rights were designed to control the international air spaces. The freedom rights are not obvious but they are usually negotiated by a pair of countries through agreements. They agree on what rights they are to use between themselves.

The Australian airline will have the first freedom right, where the airline is allowed and it can fly and cross over  another country’s territory  provided it does not land in that country. According to Lee and Blewett, (1919), this is allowed if the over flown country has been notified about it before and it accepts and approves. It can also be referred to transit freedom where from home, you can overfly a foreign country without landing. The aircraft is supposed to follow the route that is fixed by the country it is passing over. In our case, an Australian airline can fly to Vietnam through a foreign country provided it notifies it and receives its approval and it does not land. The Vietnamese airline can also pass over provided it follows the process. The Australian airline and the Vietnamese airline also will enjoy the second freedom where the airlines are allowed to land in a foreign country when the airline has a technical problem. The technical problem may be that the airline wants to refuel or that it wants to do maintenance. The airlines that have the second freedom are restricted from doing business from the country they have landed for the technical purpose to the country.

The Vietnamese airline and the Australian airline will also have the third freedom right where they will have the freedom right to carry passengers and do business from their country of origin to other destination countries. This means that Australian airlines will have the freedom rights to do business from Australian to Vietnam. Vietnam airline will also have freedom right to do business from Vietnam to Australia. This is from their home country to their destination.

The fourth freedom right is where a given airline will have the freedom to do business from a certain country of destination to the country of origin. This means that the Australian airline will have the freedom to carry passengers from Vietnam, which will be its destination country to the country of origin. The Vietnamese airlines will also posses the freedom to do business from Australia to Vietnam. This helps the airlines not to go back to their home countries after they carry passengers to another country empty.

The fifth freedom right is the right that is given to them so that they can carry people and do business with two other countries excluding the country of origin. It becomes possible only if the airline terminates to its own country or originates from its own country. In this case, the Australian airline will have the freedom right to do business form its country to Hong Kong, which will be another country and also proceed to Vietnam. The Vietnamese airline will also exercise the freedom of carrying passengers from Vietnam which is its origin to Hong Kong on its way to Australia. The memorandum signed between Vietnam and Australia will also help both airlines to enjoy the seventh freedom right which states that an airline that operates outside its state or its territory can fly into another state to discharge and carry traffic going to another state which here is the third state.

3. The six freedoms are important in the memorandum of understanding that has been signed by Australia and Vietnam. The first freedom will allow the Australian airline to fly over foreign countries to Vietnam. The route to Vietnam will go through countries that will have to be asked for permission to fly over their territory. The second freedom will let the Vietnam airline or the Australian airline to land in a foreign country if it has technical problems. The third freedom will allow the Australian airline to carry passengers from the major Australian airports which is its home country to Vietnam which will be its destination.

Also, the 4th freedom right will allow the Australian airlines to carry passengers from Vietnam back to Australia and so it will not go back empty and thus increase revenue. The 5th freedom right will allow airlines to carry passengers from Australia, stop at Hong Kong to discharge or pick up passengers and continue to Vietnam. Also it will allow carrying passengers from Vietnam stop at Hong Kong to discharge or pick up passenger and fly back to Australia. The importance of the 7th freedom right is that the airline can land in a third country and carry passengers from a third state if the state is outside the territory of registry.

4. One of the agreements that were made in the Memorandum of understanding permits the airlines to stopover in Hong Kong to drop off or to pick passengers to the other destination which is either Australia or Vietnam. The stop over as Travel Trade gazette UK and Ireland, (2003), states, improves the relationships of the countries involved and helps to boost tourism in the countries. The stop over in Hong Kong will also help in maximizing the seat occupancy and the passengers will have the option of buying tickets for an entire journey or they can buy a ticket for parts of the journey if it suits them as Ivanovic and Vujic, (2007), suggest. This increases the revenue and will help the airlines also to restock and have a little break. The Hong Kong stopover will help the Passengers to travel from;

Australia directly to Vietnam without stopping,

Australia to Hong Kong which is a stop over,

Vietnam to Hong Kong,

Vietnam to Australia,

Hong Kong to Australia and finally to Vietnam.

Hong Kong serves Australian residents because it has a gateway destination, a touring destination and also is used as a trip gateway.  The passengers from Hong Kong will have access to the main gateway destinations in Australia via the Australian airline and they can also use it as a touring destination as stated by Lew and McKercher, (2002). The travelers like to visit destinations in Hong Kong before and even after they get to their destinations. This will also help the passengers from Hong Kong who wants to visit either Australia or Vietnam. This would mean that the Australian airline and the Vietnamese airline would be using the international aviation freedom of the air to implement the Australia through Hong Kong to Vietnam sectors. Hong Kong therefore is strongly involved due to the logistical reasons of the operation such as ground handling of the passengers and aircraft in Hong Kong.

The Australian and Vietnam airlines have special permission and authorization of the Hong Kong and they can fly over its territory. According to Article 6 of the ‘Chicago Convention’ it will be legal because Hong Kong has given authorization for the flights to go through its territory and also provide transport to passengers from Hong Kong.

Freedom of Right

An airline is permitted to do business with two different countries apart from where it came from provided the flight is coming from its country or will terminate in its country of origin.  The Australian airline will be enjoying this freedom of right because it will be passing through Hong Kong on its way to Vietnam and back to Australia.

They will also enjoy the fifth freedom right because According to the ICAO fifth freedom of the air, Hong Kong would be one of the countries other than the country of registry where the aircraft will be travelling to and with respect to article-6 of the Chicago convention, will have to be involved in providing authorization for the operation. The involvement of Hong Kong will benefit both the Airlines and the passengers from both countries.

5. The identical points that are to be included while representing the Australian airline in the negotiations are the advantages that Australia will get from the Memorandum of understanding. The first advantage is that the Australian airline will enjoy the 5th freedom right where it will be allowed to do business from Australia, to Hong Kong and then it can proceed to Vietnam. The Australian airline can also enjoy the 8th freedom where it can carry domestic traffic which is always reserved for the airlines from a specific country. This freedom will allow it to carry traffic from one point in a country to another point in the same country. This means that Australian airline can be allowed after negotiations with the Vietnamese airline to carry passengers in Vietnam from one airport to a second airport still in Vietnam and that will benefit the Australian airline. The Australian airline takes the advantage of getting regular passengers because of the thirty nine services from the other Australian cities. Thailand is geographically close to Vietnam. That means that the Australian airline can take the advantage of carrying passengers who want to go to Thailand and they can pass through Vietnam. The Australian airline can also make an agreement with one of three stopovers that are in India. Indonesia is also geographically close to Vietnam which gives the Australian airline an added advantage because the passengers who would want to go from Australia to Indonesia can use the Australian airline from Australia to Vietnam and then proceed to Indonesia because there is no available capacity from Melbourne, Brisbane, Perth, and Sydney to Indonesia. With the passengers who want to go to Singapore, there is an allowance that is available although it is on a case by case basis. The passengers who may be willing to go to Vietnam through Singapore can use the Australia- Singapore- Vietnam services when they are available. From Singapore, it is only the passengers that go beyond Australia that are affected by the restrictions that apply in some of the traffic rights.

6. The other points that should be included in negotiations of Australian airline is that the airline will have an advantage of exercising  the 5th freedom right where an airline coming from Vietnam and it stop over at Hong Kong can proceed to Australia form Hong Kong doing business. There is also the advantage of services which are unlimited from Australian airports other than the main airport. The thirty nine services from the Australian Cities every week will help to increase the capacity of the passengers between Vietnam and Australia which will be an advantage to both Australia and Vietnam.

  1. 7.  The first thing to do is to get a license for international airlines to operate international flights relevant to the needs of international air service agreements between any other country and Australia that want to fly and demonstrate compliance with the companies. You must also try to prove that you are ready to comply with the agreements set by the two countries. This particular ownership and effective control, incorporation and installation and / or country of incorporation are important in relation to the issues. To get a route license, the Australian airline is also supposed to meet the national interest of the Australian government in relation to control requirements and ownership requirement.

8. There are certain things that are required for an international airline to get a route license

(1)                           Owner ship provision requirement: This means that the Australian airline cannot offer foreign ownership of more than 49 percent of the total price.

(2)   Control Criteria:

  • It is required that two-thirds of all the Board members be people from Australia or citizens of Australia but not foreigners since they will be holding the majority of shares;
  • The Board Chairperson is supposed to be a person and a citizen of Australia. This is to make sure that the company will be controlled by Australians.
  • The head office of the airline in question must be in Australia, and the airline office must be operated in the same country which is Australia. This will help to control all the operations of the airline and will improve the resources of the country.

(3)   Provide  Documents to support your Application:

Like Company profile And Air operation certificate

Company profile:

  • Present corporate existence of the applicant. The Australian airline will be required to provide and present the documents that show its existence also the memorandum of understanding that was signed between it and Vietnam and all the details in the agreement.
  • Nationality of ownership and control. The nationality of ownership is Australia. They will also have to prove that most of the board members are citizens of Australia and the company will be controlled from there.
  • Principal place of business and/or incorporation. The principle place of business will be from Australia to Vietnam and from Vietnam to Australia.
  • Insurance arrangements for passengers and third party.
  • Security program
  • Capacity arrangements



Enter in International route:

  1. Capacity available after negotiation. In our case the capacity available after negotiation with Vietnam increases by 3300 seats per week.
  2. Application by airlines—who is eligible for international operations.




Here is a register of capacity available for Vietnam










To/From Sydney, Melbourne, Brisbane or Perith:


–          To fly 14 services a week or about 4200 seats to and from the major gateway destinations of  Perth, Brisbane, Melbourne, and Sydney – an increase of about 1200

To/from any point in Australia other than Brisbane, Sydney, Perith or Melbourne

–          Fly seven services a week or about 2100 seats to and from these destinations if the flights stop over at non gateway Australian airports such as Adelaide, Darwin or Cairns Unrestricted frequencies with any aircraft type.






There has been an agreement in the memorandum of Understanding between Australian and Vietnam to increase seats by 3300 per week. There has also been an agreement to stop over at Hong Kong to drop off and to pick pass angers between Australia and Vietnam.



Ivanovic. S; Vujic, V. International logistics in flight catering. 2007. Academic Journal. Vol. 13 Issue 3, p583-594, 12p

Lew. A.; McKercher. B..2002. Trip destinations, gateways and itineraries: the example of Hong Kong. Academic Journal. Vol. 23 Issue 6, p609, 13p

Lee and Blewett, 1919. The international flying convention and the freedom of the air. Academic Journal. Vol. 33 Issue 1, p23-38, 16p

Travel Trade Gazette UK & Ireland. 2003. Australian Airlines expands operation. Periodical. issue 2556, p34, 1/9p

Transportation Journal, 2010, Air Transport Liberalization and Its Impacts on Airline Competition and Air Passenger Traffic. Academic Journal. Vol. 49 Issue 4, p24-41, 18p


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