Investors keen on Vietnam’s aviation infrastructure

Recent incentives and high potential of the local aviation industry has driven much appetite from local investors.

Many private investors are in line waiting for approval from the government to invest in aviation infrastructure projects in Vietnam thanks to the industry’s high profitability and the government’s incentives.

The Civil Aviation Authority of Vietnam (CAA) reported that at least five aviation infrastructure projects are currently being carried out by private investors including Van Don International Airport, Da Nang International Airport’s international passenger terminal, Cam Ranh International Airport’s international passenger terminal, Phan Thiet International Airport and Tan Son Nhat International Airport’s domestic terminal.

Imex Pan Pacific Group (IPP), for example, has recently proposed the Ministry of Transport to develop a runway and international terminal T2 of the Phu Quoc International Airport in Kien Giang province’s Phu Quoc Island.

In addition, IPP is also asking for cooperation with ACV to invest in a new passenger terminal with the capacity of eight million passengers per annum at the Tuy Hoa Airport in the central province of Phu Yen.

Besides IPP, Vietnam’s property developer FLC Group has also expressed its interest in upgrading Dong Hoi Airport in the central province of Quang Binh under the build-operate-transfer (BOT) model.

Trinh Van Quyet, chairman of FLC Group, which was approved in principle to invest in and upgrade Dong Hoi to an international airport, said that his group has finalized an upgrading proposal for the airport with two passenger terminals with a total designed capacity to handle 10 million passengers per year. After the upgrade, the airport can also receive large airplanes such as A350 and B787.

It is expected that the construction of runways and the passenger terminals will be started from the fourth quarter this year. The remaining support works of the airport will be built from the second quarter next year so that the airport can be put into operation by the second quarter of 2020.

Beside the construction of Tan Son Nhat passenger terminal and Long Thanh international airport which are the focal points of big domestic and foreign investors, some local airports such as Chu Lai, Cat Bi are also receiving significant attention.

Nguyen Van Tung, chairman of the People’s Committee of Hai Phong city affirmed that the northern port city had received many proposals of investors to construct the T2 Terminal of Cat Bi International Airport, in which a joint venture of an airline with a local bank committed to call for investment for this project right in 2018.

Revenue incentive

According to the CAAV, private investment in airport infrastructure has risen in the last few years. Projects on aviation terminals are easy to call for investment in because of short-term capital recovery from airport service charges, and stable revenue from food stall and duty-free shop rental.

Notably, the allure of positive performances in business results of Airports Corporation of Vietnam and Da Nang International Terminal Investment JSC has attracted many investors waiting to be licensed to invest in Vietnam’s airport infrastructure projects.

The opportunity to call for private investment is more evident after Prime Minister Nguyen Xuan Phuc approved in February the revision of the national aviation transport development plan till 2020 with a vision to 2030, which makes the industry more attractive to private investors.

Under the plan, Vietnam’s aviation industry will exploit 23 airports with an annual traffic of 144 million passengers by 2020 and 28 airports with an annual traffic of 308 million passengers by 2030. The number of aircraft will grow by more than 220 units by 2020 and 400 units by 2030, increasing by 70-100 units compared to the previous plan.

CAAV Director Dinh Viet Thang said that boosting the private investment in aviation is a breakthrough solution to reduce the pressure of the state budget and increase competitiveness of the economy.


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