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ACV needs $1.17 billion in investment for prioritized airports

Released at: 07:13, 12/06/2016

ACV needs $1.17 billion in investment for prioritized airports

Photo: Duc Anh

Airports Corporation of Vietnam to focus on airports that contribute to economic and tourism growth, those with booming passenger numbers, and those important for national security and defense.

by Minh Tuyet

Airports Corporation of Vietnam (ACV) requires investment funds of VND26.206 ($1.17 billion) for prioritized airports in the 2016-2018 period.

It currently manages 22 airports in Vietnam, including nine international and 13 domestic, catering to 80 million passengers per year. Demand is increasing dramatically, ACV has said, putting a burden on major international airports such as Tan Son Nhat, Noi Bai, and Da Nang. Dong Hoi, Cam Ranh, Phu Quoc and Phu Cat airports are also experiencing fast growth in passenger numbers.

Based on the transport development strategy, in the 2016-2018 period ACV is to focus on airports where passenger numbers are increasing drastically and those that have the potential to assist in economic and tourism development or play an important role in national security and defense.

It will invest VND7.774 trillion ($348 million) from the State budget to upgrade aviation infrastructure at these airports and use VND18.432 trillion ($825 million) of its own capital to build or upgrade other facilities.

To mobilize the capital required ACV has proposed the government provide VND995 billion ($44.5 million) to upgrade assets and technology. It has also asked the Ministry of Transport (MoT) to approve plans to adjust charges imposed on passengers.

ACV aims balance charges within five years. Take-off charges on domestic flights are 2.5 times less than on international flights. Service charges for domestic passengers are from 2.5 to 8 times less, and domestic security inspection services are six times less, whereas investment in international airports is from 20 to 30 per cent higher than for domestic airports.

It also proposed MoT accept prioritized mechanisms in selecting land to provide better airport services. If ACV then does not use the land for aviation purposes it can be given to other investors.

Give the cost of compensation and land clearance, ACV also proposed the government add to ACV’s investment funding. MoT is now reviewing development plans for aircrafts, flight routes, and infrastructure.

In 2015 Vietnam set a goal of its local carriers having 190 to 210 aircraft by 2020, from around 100 at the time, which would rank the country fifth in ASEAN, under a project from the Civil Aviation Authority of Vietnam (CAAV) on restructuring the country’s aviation sector. Air travel is targeted to become the most popular form of transport by 2020. To do so will require all aircraft be put into service seven days a week. New aircraft are to be equipped with modern technology and be fuel-efficient and friendly on the environment.

For 2016 ACV has targeted welcoming 73 million passengers, a 12.4 per cent year-on-year increase, 53 million of which will be domestic, and to cater to 516,000 commercial flights. Revenue is targeted at VND12.1 trillion ($541.9 million) and pre-tax profit at VND2 trillion ($89.5 million).

ACV is also the main investor of the Long Thanh International Airport project in southern Dong Nai province with total estimated investment of $16.03 billion and expected to serve 100 million passengers a year. The airport will be built in three stages, construction of the first of which will begin in 2019 and be completed by 2025.

The second stage will see an additional runway and another passenger terminal built, to reach capacity of 50 million passengers and 1.5 million tons of cargo per year. And the final stage will fully complete the project and see capacity reach 100 million passengers and 5 million tons of cargo per year.

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