The Vietnamese government is ready to approve the "Master plan for the development of the national airport and airport system for the period 2021-2030, with a vision to 2050,". The master plan will provide the basis for attracting private funding in the development of aviation infrastructure. At the same time, Deputy Prime Minister Le Van Thanh has recently submitted Official Letter No. 1061/VPCP - CN to the Ministry of Transport with instructions on "Project direction to mobilize social resources for investment in airport infrastructure."
The policies will offer investors a plethora of investment opportunities in the sector of airport infrastructure, which has previously been the domain of state-owned corporations.
Current status of airport system capacity in Vietnam
Vietnam currently has 22 airports, including 9 international airports and 13 domestic airports. In addition, the national airport system's overall capacity is 92.5 million passengers per year.
Northern Vietnam features seven airports, three of which are international (Noi Bai, Van Don, and Cat Bi) and four of which are domestic (Dien Bien, Tho Xuan, Dong Hoi, Vinh). The Central region contains 7 airports, including 3 international airports (Phu Bai, Da Nang, Cam Ranh) and 4 domestic airports (Chu Lai, Pleiku, Phu Cat, Tuy Hoa). Meanwhile, in the South, there are 8 airports, 3 of which are international airports (Tan Son Nhat, Can Tho, Phu Quoc) and the remaining are domestic airports (Buon Ma Thuot, Lien Khuong, Con Dao, Rach Gia, Ca Mau).
Despite having 22 airports in service nationally, 20 of them were initially military airports that have been refurbished and upgraded to civil airports. Thus, their infrastructure is now degrading, causing concerns to the general public. At the same time, national major airports such as Noi Bai, Tan Son Nhat, and Da Nang are frequently overloaded. Meanwhile, geographically-inaccessible regions like the mountainous areas in the Northwest lack aviation infrastructure. Thus, the Vietnamese government is calling for further investment to improve existing infrastructure, along with establishing new facilities, namely Con Dao Airport and Na San Airport, among others.
PPP investment opportunities in aviation infrastructure construction
The Ministry of Transport has presented Report No. 14075/TTr - BGTVT to the Prime Minister for approval of the Project on Orientation to accumulate social capital for investment in aviation infrastructure.
Following the policy, tremendous opportunities through PPP are now wide open for both domestic and global investors. The project has a size of investment capital in aviation infrastructure projects of VND 479,606 billion (equivalent to … USD) within 10 years.
Recently, the Deputy Prime Minister has discussed the possibility of investing in a number of airports. Hence, there are 11 airports and airfields, including military airports being proposed for the consideration of PPP investment. The proposed list consists of the new establishment of 4 airports (Sa Pa - Lao Cai, Phan Thiet - Binh Thuan, Quang Tri, and Lai Chau). At the same time, 7 existing airports are recommended to be upgraded, including Na San - Son La, Tho Xuan – Thanh Hoa, Chu Lai – Quang Nam, Lien Khuong - Lam Dong, Can Tho, and Con Dao - Ba Ria - Vung Tau.
Long Thanh International Airport
Long Thanh International Airport is a proposed international airport in Long Thanh District, Dong Nai Province, about 40 kilometers east of Ho Chi Minh City. The National Assembly approved the Long Thanh airport investment policy in 2015, with the objective of constructing a 4F (define 4F please) airport. The goal is to become the region's worldwide air transport hub, with a capacity of 100 million people and 5 million tons of cargo per year.
The overall size of the project is 5,364 hectares, of which 5,000 hectares are for the airport and 364 hectares are for resettlement. From 2021 to 2025, the total investment capital in phase 1 is VND 109,111,7 billion (USD equivalent please)
Quang Tri airport
Component project 1 (site clearance and construction of state agencies at the airport) is executed by leveraging public funds. Component project 2 (airport building) is implemented using the PPP strategy, with a Build - Operate - Transfer (BOT) contract.
The total investment for both stages is anticipated to be VND 5,822,9 billion. Phase 1 costs VND 2,91,6 billion, with investors raising VND 2,680.5 billion and VND 233,103 billion in central government support to carry out site clearing and resettlement. Phase 2 is estimated at VND 2,909.3 billion, of which VND 2,829,6 billion is from investors and VND 79,7 billion is from the state budget.
Van Don International Airport
Van Don international airport was developed on 325 hectares in Doan Ket Commune, Van Don District, Quang Ninh Province with a total investment of around VND 7,700 billion under a BOT contract. This is a significant project in Quang Ninh's strategic socioeconomic development plans. Van Don International Airport is a level 4E airport (according to the International Civil Aviation Organization's standard code - ICAO) and a military airport of grade II, capable of accommodating large rafts.
The airport will serve Northeast Asia (Korea, Japan, China, and Taiwan) and Southeast Asian nations (Thailand, Malaysia, Singapore, and Cambodia). The first phase passenger terminal is 25,000 m2 in size, with a capacity of 2.5 million passengers per year. Capacity will be increased to 5-10 million passengers per year in phases 2 (2020-2025) and 3 (2025-2030). In the coming phases, freight terminals, aprons, and new runways will be constructed.
Cat Bi International Airport
The task of drafting and modifying Cat Bi International Airport's planning for the years 2021- 2030, with a vision of 2050, is expected to be finished by the end of 2022.
On January 24, 2019, the Ministry of Transport received a request from Hai Phong voters for the research and construction of air traffic infrastructure to support the expansion of Cat Bi International Airport, in compliance with Resolution No. 45-NQ/Central Government. As a result, Cat Bi International Airport is expected to have an annual capacity of over 13 million passengers by 2030.
Tan Son Nhat International Airport
The Minister of Transport has just approved Decision No. 1078/QD - BGTVT, which is sanctioning the local adjustment of Tan Son Nhat International Airport planning for the period 2021-2030.
Decision No. 1078 additionally specifies a total land area of 787.46 hectares under the amended master plan. Tan Son Nhat's existing land area is 545.10 hectares; the area of defense land temporarily handed over for parking is 19.79 hectares; the area of land for defense in partnership with civil aviation is 15.26 hectares; the additional planned land area in the South is 25.66 hectares; the additional planned land area in the North is 171.65 hectares.
All of the projects listed above will be carried out in accordance with the government's strategy, which emphasizes the utilization of investment programs to promote economic growth.
Opportunities for business
The outlook for the global aviation industry will improve from 2023 as COVID-19 restrictions in China and other restrictions on international travel in Asia continue to be removed. This will boost the capacity for air freight. Businesses are leading the way in the growth of airport services by enhancing service quality to keep up with the customers' modern, practical, and competitive trends of tourism-related retail activities.
Tan Son Nhat Airport Services Joint Stock Company (Sasco) is one of the largest enterprises dealing in non-aviation services at Vietnam's airports. The business of duty-free goods, business lounge services, cuisine, hotels, and restaurants at the airport has gradually expanded into catering services, resorts, and tourism… In its consolidated financial records for the second quarter of 2022, Sasco reported net revenue of roughly VND 296 billion, an increase of 216 percent over the corresponding period in 2017. While Sasco lost over 14.5 billion dongs during the same period last year, profit before tax for businesses in the period was close to 84 billion dongs.
Similar to this, Taseco Aviation Services Joint Stock Company is the owner of a chain of more than 100 Vietnamese airport retail stores, primarily at Noi Bai and Da Nang airports. After incurring losses for two years, the company has recently begun to earn a profit.
Tax-free retail, according to securities companies, will have the greatest growth potential in the airport retail market over the next few years. Tourist numbers rise as a result of the expansion of low-cost airlines, which further enhances sales of some products at duty-free shops throughout the country, including airports. The rise in international visitors visiting Vietnam is a major factor in the duty-free retail market's expansion.
The costs of every kind of product in the airport are 30 percent – 50 percent more expensive than those outside for a variety of reasons. The revenue for an international flight is two to three times greater than for a domestic flight. The re-entry of foreign airlines, which serve more than 50 international airlines, will serve as the catalyst for future company expansion and rapid growth.
Aviation construction is now an industry with high investment potential that is promoted by the government. With a solid background in this industry, Viettonkin is always delighted to provide policy updates and valuable investment advice to investors. Contact us right away to grasp your opportunity for success!
