Revenue, Cost of Services Rendered and Taxes for the Aviation Industry in Vietnam

Introduction

The aviation industry is one of the most complex sectors from an accounting and tax perspective. An airline does not simply sell airline tickets. Its revenue model may include passenger transportation, excess baggage, cargo transportation, charter flights, ancillary services, loyalty programmes, aircraft leasing, ground services, catering, maintenance and other aviation-related activities.

At the same time, airlines face a highly cost-intensive operating model. Jet fuel, aircraft ownership or leasing, maintenance, crew costs, airport charges, navigation fees, insurance and distribution costs can represent significant portions of total operating expenses.

For airlines operating in Vietnam, accounting and tax treatment must therefore be designed around the nature of each transaction and the applicable Vietnamese accounting and tax regulations.

From 1 January 2026, enterprises generally apply Circular 99/2025/TT-BTC for the corporate accounting regime. The Ministry of Finance confirms that Circular 99 replaces Circular 200/2014/TT-BTC and provides guidance on accounting documents, accounts, bookkeeping and financial statement preparation. Tax obligations, however, continue to be determined under the relevant tax legislation.

This article provides an overview of how revenue, cost of services rendered and major taxes can be considered for an aviation business in Vietnam.

1. Understanding the Aviation Business Model

An airline's primary economic activity is the transportation of passengers, baggage and cargo by air.

A typical airline revenue model may include:

• Passenger ticket revenue

• Excess baggage revenue

• Air cargo revenue

• Charter flight revenue

• Ancillary passenger services

• Seat selection fees

• Priority boarding fees

• Cancellation and change fees

• In-flight sales

• Loyalty programme-related revenue

• Aircraft leasing revenue

• Ground-handling services

• Maintenance and technical services

• Catering services

• Advertising and other commercial income

The accounting treatment should distinguish between revenue generated from the airline's core transportation services and revenue from other activities.

This distinction becomes particularly important for VAT, corporate income tax, foreign contractor tax and financial reporting.

2. Passenger Ticket Revenue

Passenger ticket sales are normally one of the largest sources of revenue for an airline.

However, an important accounting principle is that cash received from a customer does not necessarily mean that revenue has already been earned.

For example, assume an airline sells a ticket in December 2026 for a flight scheduled for January 2027.

The airline receives VND 5 million in December, but the transportation service has not yet been performed.

The amount would generally be treated as a customer-related liability or unearned revenue until the relevant transportation service is provided, subject to the detailed accounting requirements applicable to the transaction.

When the passenger transportation service is performed, the corresponding amount is recognised as revenue.

Example

An airline sells 1,000 tickets at VND 3 million each.

Total ticket sales:

1,000 × VND 3 million = VND 3 billion

If the flights have not yet been performed at the reporting date, the accounting records should distinguish the amount received from revenue that has actually been earned.

This approach is particularly important at year-end because airlines may have millions or billions of đồng in ticket sales for future flights.

3. Revenue from Air Cargo

Air cargo is another major revenue stream.

Revenue may arise from:

• Air waybills

• Cargo transportation

• Freight charges

• Fuel surcharges

• Handling charges

• Special cargo services

• Dangerous-goods handling

• Temperature-controlled cargo services

• Other cargo-related charges

The airline should establish a revenue recognition process linked to the transportation service actually provided.

For international cargo, the tax analysis should also consider whether the transaction qualifies as international transportation and whether the relevant VAT conditions are satisfied.

4. Ancillary Revenue

Modern airlines generate significant revenue outside the basic ticket price.

Examples include:

Revenue stream	Typical example
Seat selection	Preferred or premium seats
Baggage	Excess baggage fees
Priority services	Priority boarding/check-in
Ticket changes	Change fees
Cancellation	Cancellation fees
Meals	In-flight food and beverages
Retail	In-flight sales
Wi-Fi	Internet access
Lounge	Airport lounge access
Advertising	Advertising income
Loyalty programmes	Points and related commercial arrangements

Airlines should avoid treating all ancillary revenue in exactly the same way.

The accounting and tax treatment depends on the underlying contractual arrangement and the nature of the service.

5. Loyalty Programmes

Frequent-flyer and loyalty programmes can create additional accounting complexity.

An airline may award points to customers when they purchase tickets or use other services.

Those points may subsequently be redeemed for:

• Free flights

• Discounted flights

• Upgrades

• Baggage benefits

• Partner services

The accounting analysis should determine whether part of the consideration received from the customer relates to a future obligation.

Consequently, airlines should maintain a robust system connecting:

Ticket sales → points awarded → points outstanding → points redeemed → points expired

This is particularly important for airlines with large loyalty programmes.

6. Charter Flight Revenue

Charter flights have a different commercial structure from ordinary scheduled passenger services.

The airline may enter into a contract with:

• Travel agencies

• Tour operators

• Corporate customers

• Government organisations

• Other airlines

• International organisations

Revenue recognition should follow the substance of the contractual arrangement and the services actually provided.

Contracts should clearly identify:

• Flight routes

• Number of flights

• Aircraft capacity

• Contract price

• Fuel arrangements

• Airport charges

• Cancellation terms

• Additional services

• Taxes and government charges

7. What Is "Cost of Services Rendered" for an Airline?

For an airline, the equivalent of cost of services rendered represents the costs incurred in providing air transportation and related services.

Major components normally include:

7.1 Aviation fuel

Jet fuel is generally one of the largest operating costs of an airline.

Fuel costs may be affected by:

• International oil prices

• Exchange rates

• Fuel contracts

• Hedging arrangements

• Airport fuel prices

• Fuel taxes

• Fuel consumption per flight

• Aircraft type

Because of its significance, airlines normally require detailed fuel accounting by aircraft, flight and route.

7.2 Aircraft depreciation

For owned aircraft, depreciation is a major component of operating cost.

An airline needs to establish appropriate:

• Cost basis

• Useful life

• Residual value

• Depreciation method

• Componentisation where applicable

Aircraft are high-value assets, and significant components may have different useful lives.

7.3 Aircraft leasing costs

Many airlines operate leased aircraft rather than owning their entire fleet.

Lease arrangements may include:

• Operating leases

• Finance leases

• Dry leases

• Wet leases

• Engine leases

• Spare-parts arrangements

The accounting treatment should be assessed under the applicable accounting framework, including lease accounting requirements where relevant.

From a tax perspective, payments to overseas aircraft lessors may also trigger Vietnamese withholding or foreign contractor tax considerations.

8. Aircraft Maintenance

Aircraft maintenance is another significant cost.

Costs may include:

• Routine maintenance

• Engine maintenance

• Airframe maintenance

• Component replacement

• Heavy maintenance checks

• Spare parts

• Technical services

• Maintenance contracts

• Maintenance reserves

Airlines should distinguish between expenditure that should be recognised as an expense and expenditure that qualifies for capitalisation under applicable accounting principles.

This distinction can materially affect:

Profit → EBITDA → EBIT → taxable income → cash flow

9. Crew Costs

Crew-related costs normally include:

• Pilot salaries

• Cabin crew salaries

• Allowances

• Social insurance

• Health insurance

• Unemployment insurance

• Training

• Accommodation

• Travel expenses

• Per diem

• Crew transportation

Payroll-related taxes and statutory contributions must be separately considered from the accounting recognition of employee costs.

Personal income tax obligations may arise for employees and foreign personnel working in Vietnam, depending on their tax status and applicable rules.

10. Airport and Navigation Charges

Airlines incur substantial charges for operating flights.

Examples include:

• Landing charges

• Take-off charges

• Parking charges

• Passenger service charges

• Security charges

• Air navigation charges

• Ground-handling charges

• Airport infrastructure charges

• Baggage-handling charges

The accounting system should ideally allocate these costs by:

Flight → Aircraft → Route → Airport → Cost centre

This provides management with much better information for route profitability analysis.

11. Ground Handling Costs

Ground handling may include:

• Passenger check-in

• Baggage handling

• Aircraft loading and unloading

• Aircraft pushback

• Ground transportation

• Cleaning

• Catering coordination

• Aircraft marshalling

• Technical ground support

If the airline purchases these services from a Vietnamese service provider, the VAT treatment should be determined according to the supplier's invoice and the applicable VAT rules.

If the service provider is overseas, foreign contractor tax issues may need to be examined.

12. Insurance Costs

Airlines typically purchase several types of insurance, including:

• Aircraft hull insurance

• Aviation liability insurance

• Passenger liability insurance

• Crew insurance

• Property insurance

• Business interruption insurance

Insurance costs should be recognised according to the period to which the insurance coverage relates.

13. Distribution and Booking Costs

Airlines may sell tickets through:

• Airline websites

• Mobile applications

• Travel agents

• Global distribution systems

• Online travel agencies

• Corporate booking systems

• Ticket offices

Related costs may include:

• Agent commissions

• Booking fees

• Credit card fees

• Payment gateway charges

• Global distribution system fees

• Technology platform fees

These costs should be appropriately classified and accounted for based on their nature.

14. VAT in the Aviation Industry

VAT is particularly important for airlines because aviation businesses can have a mixture of domestic and international transportation and aviation-related services.

Vietnam's VAT framework provides for a 0% VAT rate for international transportation, subject to the applicable statutory requirements. The VAT legislation also provides specific rules concerning transportation and exported services.

Historically, specific aviation services provided to foreign organisations or foreign airlines within international airport areas have also been subject to special conditions for applying the 0% VAT rate. These conditions include contractual documentation and appropriate payment evidence.

Therefore, an airline should not automatically assume that every aviation-related transaction qualifies for 0% VAT.

The VAT analysis should consider:

1. What service is being provided?

2. Who is the customer?

3. Where is the service provided?

4. Is the service related to international transportation?

5. Is there a valid contract?

6. Are payment requirements satisfied?

7. Is the transaction subject to another VAT rate or outside the scope of VAT?

15. Domestic vs International Transportation

A critical distinction for aviation companies is:

Domestic transportation

versus

International transportation

International transportation can qualify for 0% VAT where the relevant legal conditions are met.

Vietnamese VAT regulations have historically defined international transportation to include transportation of passengers, baggage and goods on international routes from Vietnam abroad or from abroad into Vietnam. Where an international transportation contract includes a domestic leg, the treatment of the domestic leg can also depend on the applicable rules.

Consequently, airlines should maintain sufficient documentation to demonstrate the nature of each transportation service.

16. VAT on Aviation Services

Airlines and aviation service providers may have many different VAT treatments within the same business.

For example:

Transaction	VAT analysis
Domestic passenger transportation	Determine applicable domestic VAT treatment
International passenger transportation	Potential 0% VAT subject to conditions
International cargo transportation	Potential 0% VAT subject to conditions
Domestic cargo	Applicable domestic VAT treatment
Catering	Determine based on nature/customer/location
Ground handling	Determine based on service and customer
Aircraft maintenance	Determine based on specific transaction
Aircraft leasing	Separate tax analysis required
Advertising	Generally analysed separately from transportation

The key lesson is that "aviation service" is not itself a sufficient basis for determining VAT treatment.

17. Corporate Income Tax

Vietnamese airlines are generally subject to corporate income tax on taxable income under Vietnam's corporate income tax legislation.

The new Corporate Income Tax Law No. 67/2025/QH15 took effect from 1 October 2025, and a consolidated version of the corporate income tax law was issued in 2026.

For a typical large Vietnamese airline, the standard corporate income tax rate is generally relevant, subject to the company's specific circumstances, incentives and applicable regulations.

Taxable income broadly starts with accounting profit and requires tax adjustments.

A simplified illustration is:

Accounting profit before tax

• Non-deductible expenses

− Tax-exempt income

− Additional tax deductions where permitted

± Other tax adjustments

= Taxable income

× applicable CIT rate

= Corporate income tax payable

18. Deductibility of Aviation Expenses

Because airlines have extremely high operating costs, the deductibility of expenses is a critical tax issue.

Potential expense categories include:

• Fuel

• Aircraft depreciation

• Aircraft leasing

• Maintenance

• Salaries

• Insurance

• Airport charges

• Navigation charges

• Advertising

• Commissions

• Interest

• Foreign service fees

• Professional fees

The accounting department should therefore maintain documentation supporting:

Business purpose + contractual basis + invoice/documentation + payment evidence + tax compliance

An expense being recorded in the accounting system does not automatically mean that it is deductible for CIT purposes.

19. Foreign Contractor Tax

Foreign contractor tax can be highly relevant to the aviation industry because airlines frequently transact with foreign suppliers.

Examples include:

• Foreign aircraft lessors

• Foreign engine lessors

• Overseas maintenance providers

• Foreign software providers

• Global distribution systems

• International consulting firms

• Foreign insurance arrangements

• Aircraft manufacturers

• Foreign technical service providers

Vietnam's foreign contractor tax framework can impose VAT and CIT obligations on foreign organisations earning income connected with Vietnam.

For foreign airlines, the tax analysis can be particularly important.

Historical Vietnamese regulations specifically address the taxable revenue of foreign airlines, including passenger ticket sales, air waybills and other amounts earned in Vietnam, while excluding certain amounts collected on behalf of the State or other organisations.

However, current transactions should be analysed under the regulations applicable at the time the income arises rather than relying solely on older guidance.

20. Double Tax Agreements

International airlines may operate across multiple jurisdictions.

A foreign airline earning income connected with Vietnam may therefore need to consider:

• Vietnamese domestic tax law

• Foreign contractor tax

• Applicable tax treaty

• Permanent establishment considerations

• International transportation provisions

• Residence status

• Treaty documentation

Vietnam has tax treaties with many countries.

Where treaty relief is claimed, appropriate documentation and procedural requirements are important.

21. Personal Income Tax

Airlines employ large numbers of:

• Pilots

• Cabin crew

• Engineers

• Ground staff

• Management

• Foreign specialists

• Expatriate employees

Personal income tax should be assessed based on the employee's Vietnamese tax status and the nature of income.

International assignments can make the analysis more complicated.

For example, a foreign pilot may:

• Live outside Vietnam

• Work on flights entering Vietnam

• Receive salary from a foreign airline

• Spend part of the year in Vietnam

The airline should therefore analyse residency, source of income, employment arrangements and applicable tax treaties.

Vietnam's new Personal Income Tax Law No. 109/2025/QH15 took effect on 1 July 2026, making current-year payroll tax procedures particularly important for employers.

22. Environmental Taxes and Aviation Fuel

Fuel taxation is an increasingly important issue for airlines.

Aviation fuel may be affected by several layers of tax and policy, including:

• VAT

• Environmental protection tax

• Import duties, where applicable

• Special consumption tax, where applicable under the relevant rules

Vietnam introduced specific 2026 measures concerning environmental protection tax, VAT and special consumption tax for fuel and aviation fuel. Resolution 19/2026/QH16 took effect on 16 April 2026, while Resolution 34/2026/NQ-CP subsequently extended certain preferential tax measures for fuel and aviation fuel from 1 July 2026.

Because these measures can change fuel costs significantly, airlines should incorporate the current applicable rates into their budgeting and route profitability models.

23. Import Duties and Aircraft-Related Equipment

Airlines may import:

• Aircraft

• Engines

• Spare parts

• Ground support equipment

• Aircraft components

• Maintenance equipment

• Technology equipment

The tax treatment may vary according to:

• Product classification

• Customs code

• Country of origin

• Import regime

• Investment incentives

• Temporary import arrangements

• Repair and re-export arrangements

Aircraft spare parts and equipment should therefore be assessed individually rather than applying a single tax treatment to all aviation imports.

24. Revenue and Cost Accounting by Flight

One of the best practices for airline accounting is to develop a flight-level profitability model.

For example:

Flight VN001

Revenue:

• Passenger tickets: VND 850 million

• Excess baggage: VND 30 million

• Cargo: VND 120 million

• Ancillary revenue: VND 50 million

Total revenue = VND 1.05 billion

Costs:

• Fuel: VND 350 million

• Crew: VND 80 million

• Airport charges: VND 120 million

• Navigation: VND 40 million

• Ground handling: VND 60 million

• Aircraft lease/depreciation: VND 180 million

• Maintenance allocation: VND 70 million

• Other operating costs: VND 40 million

Total cost = VND 940 million

Therefore:

Flight contribution = VND 1.05 billion − VND 940 million = VND 110 million

This type of analysis enables management to determine whether a route is economically sustainable.

25. Accounting System Architecture for an Airline

A robust aviation accounting system should integrate:

Booking System

↓

Passenger Service System

↓

Revenue Accounting

↓

General Ledger

↓

Tax Engine

↓

Financial Reporting

The system should ideally capture:

• Passenger

• Ticket

• Flight

• Route

• Airport

• Aircraft

• Currency

• Revenue type

• VAT treatment

• Customer

• Agent

• Payment method

This allows the accounting team to reconcile operational data with financial records.

26. Revenue Reconciliation

Airlines should perform regular reconciliation between:

Passenger booking system

and

General ledger

Key reconciliation items include:

• Tickets sold

• Tickets flown

• Tickets cancelled

• Refunds

• Rebookings

• Unused tickets

• Ancillary services

• Agency sales

• Credit card collections

• Cash collections

• Loyalty points

• Revenue recognised

• Deferred revenue

This is one of the most important internal controls for an airline.

27. Foreign Currency Considerations

Aviation businesses operate internationally and therefore frequently transact in:

• USD

• EUR

• JPY

• KRW

• SGD

• CNY

• Other currencies

Revenue may be denominated in foreign currency while costs are incurred in Vietnamese đồng or another currency.

Examples include:

• USD-denominated aircraft leases

• USD fuel contracts

• Foreign maintenance invoices

• International ticket revenue

• Foreign airport charges

Exchange-rate movements can therefore have a substantial impact on profitability.

Accounting systems should distinguish between:

Transaction-date exchange differences

and

Period-end foreign currency remeasurement differences

in accordance with the applicable accounting requirements.

28. Key Tax Risks for Airlines

The most significant tax risks may include:

Revenue classification risk

Incorrectly classifying passenger, cargo and ancillary revenue can lead to incorrect VAT and CIT treatment.

International transportation risk

Incorrectly applying 0% VAT without satisfying the required conditions may result in VAT assessments and penalties.

Foreign contractor tax risk

Payments to foreign aircraft lessors, maintenance providers and technology suppliers may create withholding tax obligations.

Payroll tax risk

International crew and expatriate employees can create complicated PIT issues.

Fuel tax risk

Changes in fuel-related taxes can materially affect operating costs.

Transfer pricing risk

Airlines belonging to multinational groups may have significant related-party transactions involving:

• Aircraft leases

• Management fees

• Technical services

• IT services

• Brand fees

• Financing

• Intercompany loans

Documentation risk

Large aviation expenses require strong contractual, invoice and payment documentation.

29. Recommended Chart of Accounts for Aviation Businesses

A specialised chart of accounts can make airline reporting significantly more effective.

Revenue

• Passenger transportation revenue

• Cargo revenue

• Excess baggage revenue

• Charter revenue

• Ancillary revenue

• Loyalty programme revenue

• Ground service revenue

• Maintenance revenue

• Aircraft leasing revenue

• Other operating revenue

Cost of services rendered

• Aviation fuel

• Crew costs

• Aircraft depreciation

• Aircraft lease costs

• Maintenance

• Spare parts

• Airport charges

• Navigation charges

• Ground handling

• Catering

• Insurance

• Passenger service costs

Operating expenses

• Selling expenses

• Marketing

• Distribution

• Administration

• IT

• Professional services

• Corporate overhead

• Research and development

This structure supports both statutory financial reporting and management reporting.

30. Key Performance Indicators

Airlines should monitor financial and operational KPIs together.

Important KPIs include:

Revenue passenger kilometres — RPK

Measures passenger traffic.

Available seat kilometres — ASK

Measures available passenger capacity.

Passenger load factor

RPK ÷ ASK

This indicates how efficiently available seats are being utilised.

Yield

Measures revenue generated per passenger kilometre.

Revenue per available seat kilometre — RASK

Measures passenger revenue relative to available capacity.

Cost per available seat kilometre — CASK

Measures operating cost relative to available capacity.

Fuel cost per ASK

Measures fuel efficiency.

Ancillary revenue per passenger

Measures the airline's ability to monetise services beyond the basic ticket.

These KPIs should be connected to the accounting system so management can reconcile operational performance with financial results.

31. Practical Month-End Closing Process

An airline's month-end accounting process should include at least the following:

1. Reconcile ticket sales to the passenger reservation system.

2. Reconcile flown coupons to recognised passenger revenue.

3. Reconcile unused tickets and deferred revenue.

4. Reconcile refunds and cancellations.

5. Reconcile cargo revenue to air waybills.

6. Accrue airport and navigation charges.

7. Record fuel consumption and fuel invoices.

8. Record aircraft lease expenses.

9. Record maintenance costs and provisions where appropriate.

10. Reconcile payroll and crew expenses.

11. Calculate VAT.

12. Review foreign contractor tax.

13. Calculate payroll-related taxes.

14. Review CIT adjustments.

15. Revalue foreign-currency balances.

16. Reconcile intercompany transactions.

17. Review related-party transactions.

18. Prepare management reports.

19. Prepare statutory financial reporting.

32. Financial Reporting Considerations

The financial statements of an airline should provide users with a clear understanding of:

• Revenue

• Operating expenses

• Aircraft assets

• Lease liabilities

• Borrowings

• Deferred revenue

• Provisions

• Foreign currency exposure

• Tax liabilities

• Related-party transactions

• Cash flows

The transition to Circular 99/2025/TT-BTC from 2026 is particularly relevant for Vietnamese enterprises because it changes the accounting framework previously associated with Circular 200/2014/TT-BTC.

Airlines should therefore review their chart of accounts, accounting policies, financial statement mapping and reporting processes to ensure that their systems are aligned with the new accounting regime.

33. Example of an Airline Profit and Loss Structure

A simplified airline income statement could look like this:

Item	VND billion
Passenger revenue	8,000
Cargo revenue	1,200
Ancillary revenue	800
Other operating revenue	200
Total revenue	10,200
Fuel	(3,200)
Aircraft lease/depreciation	(1,700)
Maintenance	(900)
Crew costs	(850)
Airport and navigation charges	(800)
Ground handling	(500)
Insurance	(200)
Other service costs	(350)
Cost of services rendered	(8,500)
Gross operating profit	1,700
Selling expenses	(400)
Administrative expenses	(300)
Operating profit	1,000
Finance costs	(350)
Other income/(expenses)	50
Profit before tax	700
Corporate income tax	(subject to tax calculation)
Profit after tax	subject to tax adjustments

This example is illustrative only and does not represent the financial results of any particular Vietnamese airline.

34. A Practical Tax Matrix

For management purposes, an airline can maintain a tax matrix such as:

Transaction	Main tax consideration
Domestic passenger ticket	VAT + CIT
International passenger ticket	VAT 0% analysis + CIT
Domestic cargo	VAT + CIT
International cargo	VAT 0% analysis + CIT
Aircraft leasing from overseas	Foreign contractor tax analysis
Foreign maintenance services	Foreign contractor tax analysis
Domestic maintenance	VAT + CIT
Aircraft fuel	VAT + applicable fuel-related taxes
Employee salaries	PIT + social insurance and related obligations
Foreign employees	PIT + treaty/residency analysis
Aircraft import	Import tax/VAT and customs analysis
Spare-parts import	Customs and import tax analysis
Intercompany service fees	CIT + transfer pricing
Intercompany aircraft lease	CIT + transfer pricing + withholding tax analysis

35. Conclusion

Revenue, cost of services rendered and taxation in the aviation industry require much more than traditional bookkeeping.

An airline should build an integrated accounting and tax framework that connects:

Flight operations → Ticketing → Revenue accounting → Cost accounting → Tax calculation → Financial reporting

The most important revenue areas include passenger transportation, cargo, ancillary services and charter operations.

The most important cost areas generally include aviation fuel, aircraft depreciation or leasing, maintenance, crew costs, airport charges, navigation charges, ground handling and insurance.

From a tax perspective, airlines should pay particular attention to:

• VAT

• Corporate income tax

• Foreign contractor tax

• Personal income tax

• Fuel-related taxes

• Import taxes

• Customs

• Transfer pricing

• Tax treaty issues

For 2026, Vietnamese aviation businesses should also pay close attention to the transition to the new accounting regime under Circular 99/2025/TT-BTC and the changes to Vietnam's tax legislation, including the new corporate income tax framework and updated VAT and fuel-tax measures.

Ultimately, the strongest aviation finance function is one that does not treat accounting, tax and operations as separate systems. Instead, it creates a single data chain from ticket sold → flight operated → revenue recognised → costs allocated → taxes calculated → profit reported.

That integrated approach provides management with better visibility over route profitability, tax exposure, cash flow and the overall financial performance of the airline.

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