Competition over airport operation licences hots-up

Jetstar Pacific has lodged a bid to operate Danang airport with the Ministry of Transport Photo: Le Toan

Vietnam’s first low-cost airline, which currently belongs to national flag carrier Vietnam Airlines (retaining a nearly 70 per cent stake), wanted to acquire the right to operate the current terminal at the Danang airport to serve as the main base for its budget flights.

Just a week previously, a consortium of local investors consisting of Taseco, AOV Investment JSC, and Hancorp, also sought the Ministry of Transport’s approval to build a new build-operate-transfer (BOT) terminal at the Danang airport which would serve four million passengers a year.

T&T Group also recently lodged a proposal with the MoT to buy the Phu Quoc International Airport in on Vietnam’s largest island off the coast of the southern province of Kien Giang. The group is keen to either buy the airport outright or acquire the right to operate the airport, including its existing workforce.

At least two other investors have reportedly shown an interest in the airport. One of them – a foreign investor – has offered to buy the airport in its entirety.

Meanwhile, the race between Vietnam Airlines and private budget carrier VietJet to acquire the right to operate part of the Noi Bai International Airport in Hanoi has reached a key stage as both competitors have made bids to buy Terminal 1 and Lobby E.

Both carriers were reported to be dissatisfied with the aviation management authority’s indication that it would allow VietJet to operate Lobby E while Terminal 1 would be operated solely by Vietnam Airlines.

The plan to auction the right to entirely operate Terminal 1 was not welcomed either.

Despite encouraging investors to apply for the right to operate airport infrastructure, management authorities have struggled to move forward as there is no precedent for such a situation. This has left authorities having to deal with a string of new arising issues such as cost setting methods and legal rights and obligations related to operations.

Lai Xuan Thanh, head of the Civil Aviation Administration of Vietnam (CAAV), the state management body responsible for aviation management, said that CAAV was working on a draft decree to replace the current decree on airport operations and management which will include new points on investors acquiring the right to operate airports and the MoT scope of competency in such contracts.

Earlier, the MoT required the Airport Corporation of Vietnam (ACV), the only airport developer and operator in the country, to submit its equitisation plan this April. This would see the state maintain a 75 per cent stake in its initial sell-off, before the stake is cut to 65 per cent at a later date.

The ACV also needs to work on devising plans on how investors acquiring the right to operate the Phu Quoc airport would work, to operate the current terminal in the Danang airport to serve budget flights, testing the implementation of the rights of investors acquiring the right to operate Lobby E and Terminal 1 at the Noi Bai airport, and detailed plans for upgrading and expanding existing airports through a variety of investment models.

“State-run airport operators need to co-operate with the CAAV to finalise and submit the list of projects calling for private investment in the aviation field,” said MoT Minister Dinh La Thang.