Airport ventures must align with future demands

On July 14 in Hanoi, the Ministry of Transport (MoT) announced a master plan for airport development nationwide for 2030 and beyond. Speaking at the conference, Deputy Minister of Transport Le Anh Tuan said that Vietnam has great potential for the development of air transport.

“The approved airport system planning is a foundation for investment development to meet air transport demand. Notably, the planning is flexible, allowing any locality that needs to build an airport to be added to the plan if they meet the necessary conditions,” Tuan said.

Airport ventures must align with future demands, Photo tapchigiaothong.vn

Dinh Viet Thang, head of the Civil Aviation Authority of Vietnam (CAAV), added, “However, when considering building an airport, many factors must be considered. The efficiency of the airport is a critical factor, as the cost of building an airport is enormous, not to mention the resources needed to maintain and develop it.”

There are currently 22 airports in operation nationwide, including nine international airports. Information from the Ministry of Transport indicates that between 2011 and 2019, investments in Vietnam’s aviation infrastructure resulted in a designed capacity for airports of 95 million passengers per year. However, in 2019, actual throughput reached 116.5 million passengers per year.

Aviation experts assess that Vietnam’s airport system is currently facing an overload. The current demand is nearly 100 million passengers per year, while local authorities planning projects that by 2030, this will rise to 279.5 million passengers.

Illustrating the complexities of overhauling the airline system across the country, last week the Ministry of Planning and Investment requested the northern mountainous province of Lao Cai to provide additional documents related to the Sapa Airport project. The documents include a report on the implementation status of component project 1, an appraisal report on capital sources, and documents on investor selection plans.

The proposed dual-use airport, serving both military and civilian purposes, was approved in 2021, but construction has made little progress, and the province is now seeking ways to enhance its attractiveness to investors. Authorities proposed changing the structure of state capital participation in the Sapa Airport project to increase attractiveness after two consecutive bidding invitations in 2022 received no bids.

“To attract investors interested in implementing component project 2, it is necessary to adjust and increase state capital participation in the project,” said a leader of Lao Cai Party Committee.

In a dispatch sent to Lao Cai Party Committee last week, the interdisciplinary appraisal council requested an analysis on why no bids were submitted.

“Lao Cai Party Committee needs to assess the ability to draw in investors if the state capital participation is increased as proposed; at the same time, it should clarify the basis for proposing the increase in state capital participation from 39.29 to 49.71 per cent of the total investment,” the dispatch stated. “The current financial plan and project implementation time do not ensure the goal of adjusting the investment policy to increase attractiveness to investors.”

Lao Cai’s projection that there will be up to 1.5 million air passengers through Sapa Airport from 2027, accounting for about half of visitors to Lao Cai in 2023, was also deemed not convincing in the dispatch. The airport location would be 80km away from Sapa’s town centre, and would compete with Noi Bai-Lao Cai Expressway and the Hanoi-Lao Cai railway. The Sapa project also requires a big loan accounting for 85 per cent of the investor’s capital, and a long payback period of up to 46 years.

On July 16, Khanh Hoa People’s Committee submitted a report to the MoT and the CAAV on Van Phong Airport planning towards 2030. The south central province plans to build Van Phong Airport in Van Ninh district. The proposed airport site is entirely on coastal water, with no residents, no planned ship docking areas, and no protective forests, facilitating site clearance. The project is proposed to cost about $309 million.

To ensure feasibility and efficiency, the government will spend funds of about $86 million (accounting for 27.2 per cent of the total investment) investing in public facilities ensuring flight operations and support part of the ground levelling work. The private developer in the project will mobilise about $230 million, including equity and commercial loans, to invest in the remaining items of the airport.

The MoT said that the research and planning of Van Phong Airport by Khanh Hoa Party Committee was in line with the prime minister’s directives.

However, the airport would share an operational area with Cam Ranh and Tuy Hoa airports, so the allocation of passenger and cargo transport as well as the impact on the other airports needs to be studied and clarified, it said. To ensure feasibility, the MoT has requested more detailed forecasts of the transport demand from the province.

Moreover, the proposed location for Van Phong Airport is entirely on water within Khanh Hoa, which is unprecedented in Vietnam. Kansai Airport in Japan was built entirely on the sea, but it is facing gradual sinking issues. Therefore, the MoT suggested that planning consultants supplement research on appropriate technical solutions and evaluate multiple factors to adapt to sea-level rise scenarios in the province.

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