return icon

Ample room for Vietnam's aviation investment

Private investors will have more options to invest in aviation infrastructure, which has been dominated by state-owned enterprises. 

Ample room for aviation investment

However, exactly how these investors can get involved and how capital can be deployed will still need to be thrashed out. 

The Ministry of Transport (MoT) has issued a report to the prime minister on approving the orientation programme for mobilising private capital to invest in aviation infrastructure facilities.

The programme has captured the attention of both local and foreign investors. The aviation infrastructure projects in the 10-year priority list have the total investment capital of VND479.6 trillion ($21 billion). This opens up investment opportunities in passenger terminals and high-yield assets under the public-private partnership (PPP) model.

According to the report, the MoT aims to seek guidance from the government and prime minister on the classification of airport systems and plans to mobilise private capital for each group of aviation infrastructure development. The MoT will then undertake a decentralisation project and solutions to mobilise resources in order to complete the master plan for the national airport system.

A PPP model for aviation infrastructure

The MoT has agreed to select a PPP model using existing aviation infrastructure assets to mobilise social capital, which is in line with Law on Investment. In addition, the ministry also proposed to classify 28 national airports planned for the 2021-2030 period into five groups, which would serve as a framework for mobilising private capital.

Specifically, the first group includes Noi Bai, Danang, Cam Ranh, Long Thanh, and Tan Son Nhat international airports. These airports play a key role in connecting passengers and cargo to the domestic and international flight networks.

The second group includes Tho Xuan, Chu Lai, Phu Cat, and Tuy Hoa airports for regular military training and operations. Airfield and land assets are managed by the Ministry of Defense (MoD).

Dien Bien, Na San, Dong Hoi, Pleiku, Buon Mat Thuot, Rach Gia, Ca Mau, Phu Quoc, and Con Dao airports constitute the third group. Located in remote, mountainous, and island areas, the airports have a capacity of receiving five million passengers per year apart from Phu Quoc. Thus, it is difficult to balance earnings and costs for the airports.

The fourth group covers Cat Bi, Vinh, Phu Bai, Lien Khuong, and Can Tho airports. The airports are designed with a capacity of receiving five million passengers per year by 2030. The airports hold the potential to attract investors without regular military operations.

Lastly, new airports such as Sapa, Quang Tri, and Lai Chau, as well as potential airports such as Cao Bang and Haiphong (Tien Lang), the second airport in Hanoi’s capital region, are in the final group.

With regard to the 21 existing airports managed by Airports Corporation of Vietnam (ACV), aviation infrastructure is divided into four clusters for management, exploitation, and investment.

Cluster 1 includes the airports’ critical works and technical infrastructure that ensure operations. They are public assets managed by state-owned enterprises under Vietnam Air Traffic Management Corporation (VATM).

Cluster 2 includes state-owned runways, taxiways, and certain airfield works. The MoT is in charge of representing the property owner as well as managing and operating the works. Meanwhile, the MoD manages a number of runways and taxiways, while ACV is in charge of exploitation, maintenance, and repair.

Cluster 3 features the remaining essential infrastructure works such as aprons, passenger terminals, and general technical infrastructure works. They are public assets held by ACV.

Cluster 4 covers aviation and non-aviation service works such as cargo terminals, hangars, pumping stations, and fuel stations, which are managed by state-owned enterprises.

Strong decentralisation

ACV still plays an important role in leading investments into aviation infrastructure. However, there are still ample opportunities for private investors if the government greenlights the programme proposed by the MoT. Accordingly, the ministry will arrange investment capital for Cluster 2 works at international airports in the first group. ACV arranges investment capital for remaining essential infrastructure works (Cluster 3). They also mobilise 100 per cent of private capital to invest in aviation and non-aviation service works (Cluster 4) in the form of business investment.

If the MoT and ACV do not achieve balance for investment capital, they will mobilise private capital for each infrastructure project under the PPP model.

With regards to the second airport group, the MoD will continue to manage the airfields (Cluster 2). The ministry will propose building a mechanism to allow the MoT and aviation enterprises to invest in renovating and upgrading the airports. If the ministry hands over the airports for management, capital will be mobilised to invest in the entire airport under a PPP model using existing infrastructure assets. Many investors are interested in the projects, particularly at Chu Lai.

Regarding the third group, the MoT will transfer airports (Cluster 2) and ACV will transfer the remaining essential infrastructure works (Cluster 3) for localities to actively mobilise resources for development. If the locality rejects the plan, the MoT and ACV will continue to manage, exploit, and invest in the airports.

For the fourth airport group, the MoT will transfer the airport (Cluster 2) and ACV will transfer the remaining essential infrastructure works (Cluster 3) to the localities. Accordingly, the locality will actively mobilise resources to invest in the development of the entire airport under the PPP model.

With the fifth airport group, the MoT proposes to mobilise private capital to invest in the entire airport under the PPP model. The local people’s committees are in charge of mobilising investment, balancing resources and organising investment.

The proposal will pave the way for more private investors to join the aviation infrastructure network, and stems from the fact that ACV faces a shortage of investment capital after the aviation sector was hit hard by the pandemic.

In 2019, ACV submitted a feasibility study for the first phase of Long Thanh International Airport to the National Assembly and the government. According to the report, ACV stated that it had fully arranged all capital needs to develop essential works for 21 airports scheduled for the 2021-2025 period.

ACV also stated that it had already arranged more than VND36 trillion ($1.58 billion) of the accumulated capital to invest in the first phase of Long Thanh. With regards to capital needs for essential airport works in the 2026-2030 period, ACV still ensures an accumulated capital flow of VND120.5 trillion ($5.3 billion) to keep track of investment.

According to the Commission for Management of State Capital at Enterprises last July, ACV is set to suffer a big slump in its earnings and profits during 2020-2025 due to the severe impact of the pandemic.

Between 2021 and 2025, ACV’s pre-tax profit is predicted to drop from VND71.62 trillion ($3.14 billion) to VND36.9 trillion ($1.62 billion). With a nearly 50 per cent slump, ACV is struggling to manage its resources in order to invest in the national aviation network’s airports.

Therefore, in the 2021-2030 period, ACV must prioritise resources for the first phase of Long Thanh and key schemes such as Tan Son Nhat, Noi Bai, Phu Bai, and Dien Bien.

It is known that there is a long line of domestic investors who are eager to research and invest in the airports managed and exploited by ACV. For example, Vietjet wishes to invest in Chu Lai, Cat Bi, Tuy Hoa, and Dien Bien airports. Imex Pan Pacific Group (IPPG) wants to invest in Phu Quoc and Tuy Hoa. Meanwhile, Vingroup expressed an intention to invest in Chu Lai, and FLC Group wishes to help fund Dong Hoi.

Another private group, T&T Group, has applied to fund the entire Quang Tri with the total investment capital of VND5.82 trillion ($253 million) under the PPP model.

Source: VIR



15th National Assembly to commence third session on May 23


AMRO forecasts Vietnam’s strong recovery amidst external headwinds

Vietnam unveils national costume for Miss International Queen 2022

Vietnamese representative Phung Truong Tran Dai officially unveiled an outfit that she will wear during the National Costume Competition at the Miss International Queen 2022 pageant set to take place in June in Thailand.

Exploring the unspoiled beauty of Du Gia

The striking beauty, peaceful nature and fresh air of Du Gia Village in Ha Giang Province never ceases to enchant travelers.

Vietnamese stocks see world-leading growth

The surge of several leading stocks is deemed as a driving force for Vietnam's stock market achieving the world's strongest gains.

Lam Kinh ancient royal capital holds feudal mysteries

The special national relic site of the Lam Kinh ancient royal capital of the Later Le Dynasty in Thanh Hoa's Tho Xuan District harbours mysterious tales about one of the most significant Vietnamese feudal reigns.

Artist goes bananas with rustic artworks

Dried banana bark might sound useless to many, but by using his creativity and skill, artist Phan Van Dac in Quang Binh Province creates vivid landscapes and soulful portraits.

Vietnam Airlines posts VND2.6-trillion net loss in Q1

Vietnam Airlines reported a net loss of over VND2.6 trillion in the first quarter of 2022, sending the national flag carrier’s accumulated loss up to VND24.5 trillion, or over US$1 billion.

Developers clamour for legal clarity

Real estate leaders suggest that detailed regulations are needed to promote a healthy condotel, officetel, and resort villa sector in Vietnam.

Soaring petrol price impacting multitude of industries

A surge in the world’s oil price is benefiting oil and gas businesses, but causing difficulties for other producers and pressurising the government’s efforts to rein in inflation.

Preserving the Mekong Delta's floating markets

The Mekong Delta's famed floating markets, where speciality products are sold on boats, provide a unique environment thatnbsp;is popular amongnbsp;both local and foreign visitors.

Lifebuoys available on rivers to prevent drowing

Tens of red and white lifebuoys have recently been hung on Long Bien Bridge crossing the Red River, Hanoi by a group of volunteers in the hope of saving drowning victims.

Urgent action needed on primate protection

A report by ENV showed that only 30% of total poaching violations in Vietnam were discovered, while 70% were unknown, meaning that the number of the langurs hunted in the forest was unclear.

Dried-frog products bring good income for farmers in An Giang

The road to the “dried-frog village” in Vinh Trung commune in Tinh Bien district in An Giang province gets especially busy beginning at 3 pm, when men set out to catch tree frogs.


SEA Games 31: Vietnamese judo team see gold number tripling target