Vietnam seeks funds for airport upgrades

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Tan Son Nhat International Airport in Ho Chi Minh City

Vietnam is calling for domestic and foreign private investment in its airports in line with its airport development programme, which aims to increase the capacity of the country’s domestic airports.

Passenger volume in Vietnam has risen from 6 million passengers in 2000 to 52 million in 2012. However, according to Vietnam’s Ministry of Transport, it has been “very difficult” to attract investments in the aviation sector, because it  requires huge capital, a long time to get returns on the invested capital, as well as appropriate expertise.

The ministry has now introduced a classification for the country’s airports. “First-class airports” comprise of the big airports which play an important role in infrastructure, including Noi Bai airport in Hanoi, Tan Son Nhat airport and Long Thanh airport in Ho Chi Minh City and Cam Ranh airport in Khanh Hoa province in the central region. “Second-class airports” are the remaining airports. The airport classification would point out which airports Vietnam should call for foreign or private investments, and which airports need state investment and development.

Currently, capital allocated by the state budget to the aviation infrastructure just accounts for 1.8 per cent of the total capital allocated to the transport development every year. The annual budget can meet just 60 per cent of the real demand, and the rest should be met with investment from the private sector.

Vietnam’s aviation sector has been increasingly privatised over the past years. Besides state-owned Vietnam Airlines, which now holds 40 per cent of the passenger and 20.2 per cent of the cargo market share, Vietnam also has private airlines, namely Vietjet Air, Air Mekong, as well as a foreign invested airline,  Jetstar Pacific. Vietnam Airlines has been proposed for an IPO later in 2013.

 

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Reading Time: 2 minutes

Tan Son Nhat International Airport in Ho Chi Minh City

Vietnam is calling for domestic and foreign private investment in its airports in line with its airport development programme, which aims to increase the capacity of the country’s domestic airports.

Reading Time: 2 minutes

Tan Son Nhat International Airport in Ho Chi Minh City

Vietnam is calling for domestic and foreign private investment in its airports in line with its airport development programme, which aims to increase the capacity of the country’s domestic airports.

Passenger volume in Vietnam has risen from 6 million passengers in 2000 to 52 million in 2012. However, according to Vietnam’s Ministry of Transport, it has been “very difficult” to attract investments in the aviation sector, because it  requires huge capital, a long time to get returns on the invested capital, as well as appropriate expertise.

The ministry has now introduced a classification for the country’s airports. “First-class airports” comprise of the big airports which play an important role in infrastructure, including Noi Bai airport in Hanoi, Tan Son Nhat airport and Long Thanh airport in Ho Chi Minh City and Cam Ranh airport in Khanh Hoa province in the central region. “Second-class airports” are the remaining airports. The airport classification would point out which airports Vietnam should call for foreign or private investments, and which airports need state investment and development.

Currently, capital allocated by the state budget to the aviation infrastructure just accounts for 1.8 per cent of the total capital allocated to the transport development every year. The annual budget can meet just 60 per cent of the real demand, and the rest should be met with investment from the private sector.

Vietnam’s aviation sector has been increasingly privatised over the past years. Besides state-owned Vietnam Airlines, which now holds 40 per cent of the passenger and 20.2 per cent of the cargo market share, Vietnam also has private airlines, namely Vietjet Air, Air Mekong, as well as a foreign invested airline,  Jetstar Pacific. Vietnam Airlines has been proposed for an IPO later in 2013.

 

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