Private investment in aviation infrastructure booms
Many private investors are taking part in aviation infrastructure projects, fuelled by the industry’s high profitability capacity, streamlined development strategy and favorable investment climate.
Statistics of the Civil Aviation Authority of Vietnam (CAA) show 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 proposed to invest in the Phu Quoc International Airport
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Specifically, IPP proposed to build a second landing runway in Phu Quoc with the length of 3,000 meters and the width of 45 meters at a cost of VND2 trillion (US$88.1 million), which will be able to accommodate new generation aircraft such as Boeing787 and Airbus 359 to help the airport receive 25 million passengers per year.
Among the total investment capital, IPP suggested the Kien Giang Province’s People Committee to contribute a part. The remaining capital will come from IPP and CAA as setting by the Ministry of Transport.
Apart from the second landing runway, IPP also wants to cooperate with CAA to build the airport’s passenger terminal T2 with a total investment capital of VND 7 trillion, which can receive 10 million passengers per year.
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. IPP is willing to give ACV the position as legal representative cum CEO at this project.
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 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 and total design capacity of 10 million passengers per year. After the upgrade, the airport can also receive airplanes of 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.
According to experts, one of the reasons for the recent booming investment of private investors in transportation infrastructure is the attractiveness from the profit that this sector brings about. Specifically, there must mention positive business results of Airports Corporation of Vietnam (ACV) or Da Nang International Terminal Investment Joint Stock Company (AHT).
In addition, the legal framework for the industry’s operation has been more favorable after the Ministry of Transport recently announced to remove 58 of 78 its business conditions.
More importantly, the experts said, the government approved the revision of the national aviation transport development plan till 2020 with a vision to 2030 in February, which helps 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.
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