Aviation infrastructure promises attractive profits for investors

VietNamNet Bridge - Both state-owned and private businesses are eyeing aviation infrastructure projects, which are believed to bring high profits thanks to increasingly high travel demand.

VietNamNet Bridge - Both state-owned and private businesses are eyeing aviation infrastructure projects, which are believed to bring high profits thanks to increasingly high travel demand.

Private investors are eyeing aviation infrastructure projects

In July, IPP Group opened the international terminal at the Cam Ranh International Airport, built with investment capital of VND3.735 trillion. The terminal has the capacity of 2.5-4.5 million passengers a year in the first phase of operation, which will increase to 6-8 million passengers in the second phase.

Besides the Cam Ranh terminal, IPP has registered two projects at Phu Quoc and Tuy Hoa Airports. The investor will build the second runway at the former and the 10-million passenger terminal at the latter, with total investment capital of VND10 trillion.

FLC Group, a real estate conglomerate, has asked the Ministry of Transport to approve the project on upgrading Dong Hoi Airport in the central province of Quang Binh.

Private investors have contributed capital to five aviation infrastructure projects, namely the Van Don and Phan Thiet Airports, and the terminals at Da Nang, Cam Ranh and Tan Son Nhat Airports.

According to the Civil Aviation Authority of Vietnam (CAAV), private investors have contributed capital to five aviation infrastructure projects, namely the Van Don and Phan Thiet Airports, and the terminals at Da Nang, Cam Ranh and Tan Son Nhat Airports.

The need for huge investment capital is no longer a problem for private investors. They are encouraged by the sharp growth rates in number of travelers and the profit that aviation infrastructure developers can get.

The Airports Corporation of Vietnam (ACV), which is developing 22 airports, saw profit soaring from VND1.7 trillion in 2015 to VND4 trillion in 2017.

Though the infrastructure market has opened to private investors, ACV, a state-owned corporation, remains the biggest investor. In 2018, ACB allocated a budget of VND30 trillion to upgrade and enlarge terminals at some airports.

These include VND9.8 trillion to build T3 terminal at Tan Son Nhat airport, VND2.9 trillion at Phu Bai Airport, VND2.9 trillion at Cat Bi Airport and VND2.85 trillion at Chu Lai Airport. The total investment capital is expected to reach VND78 trillion by 2025.

Tran Dinh Thien, head of the Vietnam Economics Institute, said attracting private capital is indispensable as the demand for airport infrastructure has boomed, while ODA capital is on the decrease as Vietnam is no longer classified as a a poor country.

The cooperation between the state and private investors has brought success. Cam Ranh International Airport, run by a joint venture of the state-owned ACV and private IPP, Yen Khanh Production-Trade-Service, Viet Xuan Moi, Nasco and Vietjet, is a typical example.