The detailed adjusted master planning of the project to upgrade and expand Tan Son Nhat International Airport is attracting attention from various large investors.

Two new terminals

According to a source of VIR, the Civil Aviation Administration of Vietnam (CAAV) has resubmitted the adjusted master planning for Tan Son Nhat International Airport from now to 2020 with vision to 2030 (the April plan).

This plan is tailored to fit the guidance Prime Minister Nguyen Xuan Phuc issued at the government’s regular meeting on March 7, 2017.

It is likely to be the final plan after the previous three failed adjustment plans of CAAV in the first four months of 2017.

Related to the planning of civil aviation areas, CAAV suggested to build an additional terminal serving civil aviation (T4 terminal), with a capacity of 15 million passengers a year.

“Including the existing terminals, the airport’s designed capacity after the completion of T4 will be 43 million passengers a year,” said Lai Xuan Thanh, director of CAAV.

The April plan also revealed that according to CAAV’s proposal to the Ministry of Transport (MoT), the airfield’s current take-off and landing runways will remain unchanged, though a new parallel runway between the take-off and landing runway 25L/07R and the E6 parallel runway will be added. The adjustment plan also adds runways connecting these parallel runways and takeoff/landing runways and two escape lanes between two takeoff/landing runways.

The planning agency also proposed to extend the apron for civil and military aircrafts at the 19.97-hectare land plot managed by the Ministry of Defence.

This item will be carried out simultaneously with the expansion of the aircraft parking area in front of the new civil and military terminal to expand Tan Son Nhat’s current jet parking space and allow up to 80-85 planes to park at a time.

Despite not specifying scale, the April plan supplemented a construction of a new civil terminal with the area of about 12.72 hectares.

Regarding access roads on the land managed by the People’s Committee of Ho Chi Minh City, CAAV proposed to expand the 18E road, which links Cong Hoa Street and the T4 terminal.

The plan also included a proposal to construct a new technical service area, a hangar, and an apron in front of the hangar, located on a 30-hectare area. 

Moreover, CAAV suggested building the technical service area from scratch, including an aircraft repair and maintenance area, warehouses, a food processing area, and a gathering area, among other functional facilities. 

Additionally, the adjustment would relocate this area to the ten-hectare land plot in the southeast area of the airport.

Open for private capital

In total, the cost of investing in seven major items, including upgrading the runway system, the construction of parallel runways and connecting runways, new passenger terminals, drainage system, reservoirs, north and south-eastern aviation service works, upgrading and expanding the interconnected transportation systems to reach the adjusted planning targets will need about VND19.350 trillion ($847.1 million).

According to the latest proposal of CAAV, the investment in the construction of new terminals including T4 and the terminal serving civil aviation on military land plots, air service works located in the north and southeast areas, will be financed from private investment. 

Airport Corporation of Vietnam (ACV) will be in charge of mobilising capital contribution from investors.

The project to expand the T3 and T4 terminals has lured in many big investors from all over the country. 

At present, the MoT has received proposals to invest in the T4 terminal from four investors, namely Imex Pan Pacific Group (IPP), Airport Corporation of Vietnam (ACV), Vietjet Aviation Joint Stock Company, and Danang International Terminal Investment and Exploitation Joint Stock Company (AHT).

ACV has asked MoT to allow it to mobilise private capital for project implementation by setting up a joint stock company with a state capital contribution below 30 per cent.

“MoT is assigning CAAV to study and propose projects with an aim to choose the right and appropriate investors, ensuring objectivity, transparency, and efficiency,” said Nguyen Danh Huy, general director of the Private Public Partnership Investment Project Management Department under the Ministry of Transport.

The T4 terminal has lured in many investors, including the potential strategic shareholder of ACV from France, due to various reasons.

With 32.5 million passengers passing through the airport in 2016 only, the airport goes far beyond its designed capacity of 28 million air travellers. 

In the upcoming years, the passenger volume at Tan Son Nhat International Airport is expected to grow at an average of 15 per cent a year. 

This also means that the T4 terminal, when completed and put into operation, will not be short of customers.

With the T4 terminal’s capacity of 15 million passengers a year, excluding the revenue from services not related to air transport just by multiplying the number of passengers by the price of passenger service ($20 per passenger for international flights, VND70,000 per passenger for domestic flights, including value added tax), one can see the relatively large revenue that the investor will receive each year, a wholesome pay-out compared to the total investment (estimated at VND4 trillion ($176 million).

According to MoT, the biggest obstacle in the expansion of Tan Son Nhat International Airport is the investment for the airport system, including runways, parallel runways, and the apron. 

CAAV continues to maintain the views expressed in previous proposals, saying that ACV will be the investor and will be reimbursed from the proceeds of leasing the airport infrastructure. 

In addition, ACV will be allowed to retain the annual dividends of the state stake.

However, the Ministry of Finance and the Ministry of Planning and Investment (MPI) said that the proposal violates the Law on State Budget and the Law on Public Investment.

“The revenues from these sources at ACV belong to the state budget. MPI proposed MoT to consider other legal capital sources for implementation,” said an MPI document signed by Nguyen Van Trung, Deputy Minister of Planning and Investment.

After its expansion, Tan Son Nhat airport is going to have area of 628.9 hectares (higher than the current 574.4 hectares). 

It will be able to serve 43-45 million passengers a year and process 1 million tonnes of cargo a year. It will be able to accomodate 80-85 parking planes, and serve ATR72, A320, A3321, B747, B777/787, A350 and equivalents.

VIR