Vietnam Airlines becomes an airport investor




  • Vietnam Airlines will invest in a new airport in the country’s largest city, Ho Chi Minh City.
  • Foreign investments in Vietnamese airports are suspended after the failure of an agreement with Groupe ADP.
  • Vietnam Airlines and VietJet have expressed interest in airport development since 2015; now both have the option to operate at least individual terminals again.
  • The seating capacity was increasing rapidly before the pandemic and did not decrease much during it.
  • Ho Chi Minh City could have a capacity of 150 million ppa in a short period of time.

Vietnam Airlines to invest $ 430 million in new Long Thanh airport

In February 2021, Vietnam Airlines Chairman Dang Ngoc Hoa announced that the airline was planning to invest around 10,000 billion VND (434.3 million USD) in Long Thanh International Airport – the new airport underway. building near Ho Chi Minh City, and one of the largest infrastructure projects in the country.

With the airport potentially capable of handling up to 100 million passengers per year when completed, the ground was thrown there in January-2021, after six years of hesitation on a facility that will cost $ 14 billion. and which has not (yet) attracted the hoped-for contribution from the private sector.

The development of Long Thanh was reported in detail in January-2021.

To see: Vietnam innovates at Long Thanh airport: great ambitions

Mr. Dang said the company would set aside the necessary resources to participate in the construction and operation of the airport, including providing aviation fuel, technical ground services and duty-free sales.

Vietnam Airlines had previously sought to operate a terminal at the existing Ho Chi Minh City airport

Vietnam Airlines had a temporary interest in operating and financing airports and first caught the attention of the CAPA Global Airport Investors Database (GAID) in 2015, when in March of the same year it expressed its interest in purchasing the rights to operate the terminal. 1 at Hanoi Noi Bai International Airport. At the time, Noi Bai was one of the two largest bases of Vietnam Airlines.

The airline noted at the time: “There has been a popular trend to privatize major terminals at international airports around the world to facilitate the development of large airline companies. This trend is perfectly suited to the policy of the Vietnamese Ministry of Transport to call for private investment in airport infrastructure. We expect that the agreements, if successful, will allow us to operate more flexibly, increase services and reduce costs. “

At the time, the observation was made in CAPA GAID that the offer for the Noi Bai terminal was perhaps a defensive measure, to protect the interests of the airline in a major hub airport from any adverse influence. foreign investors, who were increasingly favored throughout Southeast Asia. Vietnam Airlines was a member of SkyTeam and was already largely aligned horizontally and vertically.

Then, in September 2015, Vietnam Civil Aviation Authority (CAAV) Director Lai Xuan Thanh said the airport privatization process would require intensive planning to avoid airline monopolization. or regulatory issues that could threaten the security of the country.

Mr. Thanh said several airlines and private investors, including Vietnam Airlines, have expressed interest in the privatization of airports in general, and not just in large cities, such as Hanoi and Ho Chi Minh.

Groupe ADP deal put xenophobia to bed, but this deal fell through

The issue of security and the need to protect critical infrastructure from foreign ‘penetration’ arose in many countries in the region, but after 2015 it faded into the background in Vietnam, mainly due to the attempt to reach an agreement with Groupe ADP to invest and improve airports across the country.

Groupe ADP is one of the largest French airport operators, responsible among other things for Parisian airports, which are still partly owned by the State, and as such, the group is a representative of what was once the colonial power. In Vietnam.

Indeed, Airports Corporation of Vietnam (ACV) signed a strategic agreement with what was then Aéroports de Paris to acquire a 20% stake in ACV, which operates 22 airports across Vietnam. Groupe ADP signed a preliminary agreement to take the stake, but the agreement was never concluded and was terminated in 2017.

Several airport projects in a growing environment

Today, ACV finds itself in the position of having to attract investors to meet the demands of multiple airport projects in a country that had experienced an average growth rate of 16.5% in seat capacity between 2013 and 2019, and which fell only 40% in 2020 as Vietnam largely escaped the ravages of the coronavirus pandemic.

Vietnam Airlines’ proposal can hardly be refused

By committing to help build the extremely expensive Long Thanh Airport, Vietnam Airlines is putting itself in a position that ACV can hardly refuse.

As the previous report indicated, while the Ministry of Transport approved the use of public-private partnership (PPP) investment programs in 2015 and the Ministry of Planning and Investment approved the PPP law, following the withdrawal of Groupe ADP, none of this really transpired. The last comment on private sector participation was made in August 2019, when the President of the National Assembly of Vietnam, Nguyen Thi Kim Ngan, said that private companies “should be encouraged to invest in airport projects through the country, in particular Long Thanh International Airport ”.

Thus, Vietnam Airlines ticks many boxes in this regard. While the state remains the majority shareholder, Japanese airline ANA has held an 8.8% stake since 2016, and the government intends to further divest the state’s stake at 75%.

ANA is not a foreign airport operator and is the largest airline by seat in Vietnam (47% of capacity during the week of March 15, 2021 and 51% at the existing Tan Son Nhat airport in Hanoi) .

VietJet could also reappear as an airport operator

And now we also have to consider what will be the potential participation in the airport operation of Vietnam’s second largest airline, VietJet Air. The Hanoi-based low-cost company is also linked to the prospect of private airport operations since 2015, at the Noi Baht terminal.

VietJet Air had previously expressed interest in the proposal, submitting a Letter of Intent (LoI) to resume operations from T1, subject to issuance of a tender.

Then, in August 2015, ACV said it had received 12 expressions of interest in operating the international terminal at Cam Ranh Airport, where the airport authority was looking for a contractor to build and operate a new terminal capable of accommodating two million passengers per year.

VietJet Air Managing Director Luu Duc Khanh even went so far as to say that he hoped Vietnamese airports would be open to investment from private companies, because “airlines are the main users of airport infrastructure and I therefore hopes that the policy of granting airport concessions to companies will be put in place. “

Then, in November 2015, VietJet Air asked the Ministry of Transport to operate Phu Quoc International Airport under a 30-year pilot lease.

We haven’t heard from it since then, but that could be about to change.

More than 50 airlines have airport interests, or have coveted them

The CAPA Global Infrastructure Database actually contains details of as many as 53 airlines and airline groups that have expressed an interest in operating and / or investing in airports at one time or another, or who have done so. are currently doing.

These are (the Asian airlines highlighted in fat):

Tan Son Nhat airport upgrades could mean passenger capacity of up to 150mppa

In other developments, ACV said in mid-March-2021 that it intends to start work to develop the existing Terminal 3 at Tan Son Nhat Airport in Ho Chi Minh City in October-2021. .

The terminal will require an investment estimated at 11 trillion VND (478.3 million USD) – which is a figure similar to Vietnam Airlines’ investment in the new airport – and is expected to be completed within 24 months. The T3 will be equipped to accommodate up to 20 million passengers per year.

So between the two airports, Ho Chi Minh City should be able to handle 150 mppa in the not too distant future, which puts it at least on par with much more established aviation cities such as Singapore, Bangkok and Hong Kong.

Whether or not it can become a hub to challenge these airports will be influenced by several factors, including the distribution of traffic and whether or not “hub airports” are needed, and what devices exist to serve them.

Vietnam’s Wider Privatization Opportunities Begin to Materialize

Meanwhile, the Vietnam Civil Aviation Authority (CAAV) has submitted proposals to the Vietnamese Ministry of Transport (MoT) for the development of a public-private partnership (PPP) and private investment in the facilities of aeronautical services at airports operated by the Airports Corporation of Vietnam. , while the pace of privatizations seems to be accelerating again after the collapse of Groupe ADP.

The PPP proposals cover the development of six airports in Dong Hoi, Rach Gia, Ca Mau, Sa Pa, Lai Chau and Quang Tri. From 2021 to 2025, a build-operate-transfer model would be tested, using Dong Hoi as a pilot project. A similar model has already been applied to the development of Van Don Quang Ninh International Airport.

In early February 2021, the ministry approved the planning of Dong Ha International Airport (Quang Tri Airport) for the period up to 2030. The ministry instructed the Vietnam Civil Aviation Authority to continue to review the planning and oversee the technical and economic properties of construction. .

The airport will serve both commercial and military aviation, will have a capacity of one million passengers per year and will be able to accommodate A320 / A321 and aircraft of equivalent size.



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