Non-aviation revenue in Vietnam's airports less than other regional countries

Non-aviation revenue in the airport business, including sales per passenger through ACV (Airports Corporation of Vietnam), is $1, compared with the average of $10-12 in Asia and $4-5 in Thailand and Malaysia.

VietNamNet Bridge - Non-aviation revenue in the airport business, including sales per passenger through ACV (Airports Corporation of Vietnam), is $1, compared with the average of $10-12 in Asia and $4-5 in Thailand and Malaysia.

ACV manages 22 airports in Vietnam which served 81 million passengers in 2016, the third highest level in SE Asia, after Thailand and Malaysia.

According to Nielsen, the Vietnamese young population with improved income and the increased number of middle-income earners serve as the impetus for Vietnam’s aviation industry to develop.

However, ACV’s business still has not developed proportionally to the increased number of passengers. Its 12-month revenue by the end of the third quarter of 2016 was 40 percent and 60 percent of AOT's, the unit that manages airports in Thailand, and Malaysia's BHD, the unit that manages airports in Malaysia, respectively. Its passengers were equal to 68 percent and 60 percent, respectively.

This is attributed to the low proportion of international travelers through the ACV system, just 30 percent, lower than AOT’s 58 percent and Malaysia BHD’s 48 percent.

Analysts also blamed the limited development of associated added-value services provided to passengers in terminals.

In order to improve revenue, airport management units in ASEAN countries develop projects on integrated terminals which comprise service areas, including shopping accommodation and food areas. The strong development of non-aviation added-value services, such as advertisement, retail premises leasing and food services will help improve the airport management unit’s profit.

The analysts said the potential was high, citing a forecast that the number of domestic passengers would increase by 18-20 percent per annum, and a report about the shift of FDI (foreign direct investment) capital flow from China to Vietnam.

A report of the Vietnam National Administration of Tourism (VNAT) showed that the number of foreign tourists to Vietnam in 2016 increased significantly by 26 percent. Tourists from China and Hong Kong increased by 52 percent, accounting for 27 percent of total travelers.

ACV is now seeking permission to raise fees for some services including taking off/landing and security checks.

Nguyen Hoang from Rong Viet Securities Company said that the prospects of the aviation sector and airports are ‘positive’, and the thing that ACV needs to do is to improve the operation efficiency and quickly implement the plans to increase the productivity to grab opportunities for growth.

In the latest news, Minister of Transport Nguyen Hong Truong affirmed the State will disinvest from ACV. It now holds more than 95 percent ACV’s chartered capital and plans to reduce the figure to 75 percent. A contract on selling strategic shares to Aeróports de Paris is expected to be signed in March 2017.