Airports up for sale

Bids for Noi Bai Terminal 1 have been received from Vietnam Airlines and VietJet

The carriers’ rival proposals to the Ministry of Transport follow a government announcement late last month that it would sell the rights to operate Phu Quoc International Airport, and planned to equitise the Airport Corporation of Vietnam – the only airport developer and operator in the country.

The idea to allow private companies to manage civil airports or terminals was initially proposed by the Civil Aviation Administration of Vietnam (CAAV) two years ago.

In addition to Phu Quoc International Airport, CAAV general director Lai Xuan Thanh said the authority would complete a shortlist of airports calling for private investment within this month, including the sale of Terminal 1 at Noi Bai International Airport.

“Many investors are interested in aviation infrastructure because of the rapid growth of the Vietnamese aviation market,” said Thanh, citing VietJet and Vietnam Airlines’ proposals as a positive start.

He added the authority would meet investors in coming time to further discuss potential transactions.

While VietJet wants to have the right to operate Lobby E at Terminal 1, Noi Bai Airport, for 20 years, Vietnam Airlines wants to acquire the entire terminal. Both carriers believe the investment would ensure a sustainable growth for their business.

According to the CAAV, the opportunity for investors is huge as the government is planning to encourage private investment in the expansion of airports such as Cam Ranh and Danang.

Vietnam has 21 operating airports at present. Five more airports are planned to become operational by 2020, raising the total airport number to 26. All the airports are now under the management of the state.

Last year, Rang Dong Company became the first private investor to enter Vietnam’s aviation infrastructure market, by building Phan Thiet Airport in Binh Thuan province.

Leading property developer, the Sun Group is planning to invest in Van Don Airport in Quang Ninh province. The domestic airport will help boost tourism at the UNESCO-recognised world natural heritage site at Ha Long Bay. According to Quang Ninh People’s Committee, airport construction could start this April.

During the past decade some foreign investors have expressed interest in investing in airport projects, however none received investment licences. US-based ADC-HAS Airports proposed to invest into seven airports in the central region in 2011 under public-private partnership form, including Chu Lai, Phu Bai, Danang, Tuy Hoa, Quy Nhon, Pleiku and Cam Ranh airport. Singapore’s Changi Airports International wanted to invest in Phu Bai airport, while another US-based Airis Holdings also wanted to invest in airport projects in Vietnam.

Thanh said the lack of a legal framework was a barrier hindering private investors from investing in aviation infrastructure during the past time. But this obstacle would be removed after the CAAV reviewed the legal framework.