Phu Quoc airport lures investors

Heavyweight local investors are bidding to operate the Phu Quoc International Airport - Photo: Le Toan

Imex Pan Pacific Corporation (IPP), chaired by overseas Vietnamese Jonathan Hanh Nguyen, last week became the latest heavyweight rival to T&T Group in the race to secure the right to operate Phu Quoc airport.

T&T Group became the first investor to lodge a bid with the Ministry of Transport (MoT) for approval of its investment into the airport. The move followed Minister of Transport Dinh La Thang’s request that Airports Corporation of Vietnam (ACV), prepare a pilot plan to sell its entire stake in Phu Quoc airport during a meeting in Hanoi in late February.

In its proposal to the transport authority, Jonathan Hanh Nguyen sought the MoT’s permission to either buy the airport or be given the right to operate the airport for a specific period of time.

IPP was also reportedly the third investor, behind national flag carrier Vietnam Airlines and low-cost VietJet, seeking the right to operate the passenger terminal at Hanoi’s Noi Bai International Airport.

The strength of IPP’s proposal lies in the wealth of experience the group has in providing non-aviation services at various airports in addition to relatively strong finances of VND1.25 trillion ($58.4 million) in charter capital.

“IPP is proud of its 25 year-plus experience in supplying goods and managing duty-free shops, fast-food restaurants and retail outlets at many international and local airports throughout the country,” said the IPP chairman.

IPP is already a strategic partner of Southern Airports Services JSC (Sasco), Vietnam’s largest aviation services business, in which it retains 23.6 per cent stake.

Another supposed plus-point for IPP is that the company has reached an agreement with Incheon International Airport Corporation, one of global best performers in airport operation and management, to jointly carry out equitisation plans or the transfer of operational rights to run Vietnamese airports.

Besides T&T and IPP, experts are guessing that Vingroup might be the next investor to express interest in Phu Quoc airport which achieved 46 per cent passenger growth last year.

The MoT plan on giving the right to operate Phu Quoc airport to a local investors is one of several pilot projects encouraging private investment in the industry.

The plan received in-principle approval from competent government agencies, including the Ministry of Defence and the Ministry of Planning and Investment (MPI).

The MPI has proposed to exclude foreign investors from operating the airport due to its ‘strategic location’.

“Even when the airport was given to a local investor, that investor must not be allowed to later transfer their right to a foreign investor,” Deputy Minister of Planning and Investment Nguyen Van Trung said.

The MPI also suggested the transfer price would be set after fully calculating investment costs, the potential for exploitation and accurate growth forecasts, as Phu Quoc airport is enjoying the fastest growth among Vietnam’s airports in terms of both freight and passengers.

To ensure objectivity, the MPI has proposed that the government entrust the MoT to form an inter-sectoral workgroup or a valuation council with members coming from various state agencies to work on setting Phu Quoc airport’s transfer price.

In respect to the plan on transferring the right to operate Phu Quoc airport, Lai Xuan Thanh, chief of the Civil Aviation Administration of Vietnam (CAAV), a state management agency in the aviation field, said the CAAV and ACV were considering two scenarios.

In the first scenario, the transfer is made under the operate-management (O&M) model, meaning the investor will form a joint stock company to operate the entire airport or the terminal for a maximum of 70 years, with or without a capital contribution from ACV.

In the second scenario, ACV will form Phu Quoc Airport Operation JSC and will then sell between a 30 and 100 per cent stake in the company, depending on the government’s decision.

The $183 million Phu Quoc International Airport entered operation in December 2012. It currently has the capacity to handle four million passengers per year.