"Opening the door" to invest in a private airport

Van Don Airport marks a new milestone in Vietnam's aviation thinking: the private sector can also participate in implementing infrastructure of national value. Photo: Internet

The economy takes off if there is an airport

Currently, the country has 22 airports in operation, of which many domestic airports have had to operate beyond announced capacities, such as domestic passenger terminals at Con Dao, Cat Bi, Phu Quoc, Lien Khuong, Cam Ranh, etc.

According to some economic experts, besides a large airport like Long Thanh, which is urgently constructed, Vietnam needs to have more small airports. These airports, in addition to serving the needs of passenger and cargo movement, are also backup "buffers" for large airports, which are meant to help promote the local economy, serve national security as well as perform other functions to support forestry production, agriculture, forest fire prevention, etc.

Many localities over the past time have also realized the need for airports to serve travel needs and attract investment and economic development. Specifically, on September 29, the People's Committee of Ha Giang province sent a document to the Prime Minister and the Ministry of Transport requesting the addition of Tan Quang airport to the planning to exploit the advantages of development better. Of local.

Previously, several localities such as Son La, Tuyen Quang, Kon Tum, Ninh Thuan and Dong Nai also requested to add airports to the draft master plan for developing the national airport system in the 2021- 2030 period, vision to 2050. In the proposal to build airports, these localities all highlight the advantages and opportunities if airports are built in their localities.

From a local perspective, Mr Nguyen Trong Hai, Vice Chairman of the Lao Cai Provincial People's Committee, said that Lao Cai is a mountainous province with rugged terrain but is blessed with natural beauty and cultural identity. With the orientation of making tourism a pillar of development, for many years, the former leaders of Lao Cai province have pondered the need to develop synchronous infrastructure and transport, including constructing an airport.

"When there was a plan for the construction of Sapa airport, we also sought more experts on consulting and building the airport with the expectation that when completed, this project would boost the number of tourists to Lao Cai, and the local economy would develop further," emphasized Mr Nguyen Trong Hai.

They were assessing the needs of airports in localities, Assoc.Prof.Dr. Tran Dinh Thien, former director of the Central Institute of Economics, said it is necessary to recognize the practical needs of localities proposing to build airports. Currently, the speed, intensity, frequency, and demand for travel are changing globally. The more places no one knows for a long time, the more people like to go, the more complex and dangerous places are, the more popular they become... That creates an explosion of specific needs and is a prerequisite and opportunity for development in rugged and remote areas. For the reasons mentioned above, localities continuously apply for additions to the planning and implementation of investment in dual-use, small-scale airports is a real need, far from the investment style in the previous period.

According to Mr Nguyen Van Vinh, Deputy Director of the Institute of Development Strategy (Ministry of Planning and Investment), if invested in developing more small airports, it will bring opportunities to access and pave the way for the development of localities. Moreover, air connectivity creates conditions to unlock the potential for economic development.

The development of more small airports is necessary, especially since the airport network in Vietnam is still considered "thinner" than many countries in the region and the world; while Vietnam has an open economy, the demand for travel and trade is increasing.

Openness to mobilize resources

According to Mr Mick Weson, Chief Economist of NACO (a company of Royal HaskoningDHV Group), Vietnam needs to consider planning the airport system in 3 layers. The top layer is the major hub airports, with an annual flow of more than 20 million passengers, handling most of the traffic demand. The lowest tier is local or tertiary airports with less than 1 million annual passengers. And the middle layer, also known as the bridge layer, plays the role of connecting hub airports and local airports.

These airports don't only function as direct "feeders" for major airports in an optimized transport network but also as strategic backup airports in case major airports become overwhelmed. In other words, large hub airports could not sustain their superior traffic and value networks without small airports.

According to Mr Mick Weerson, small airports also carry other meanings besides the connection function. When properly managed, small airports with more than 1 million annual passengers can generate direct economic value in terms of profits for operators and investors, creating direct jobs. And finally, it creates indirect economic value that helps attract investment and promotes or supports economic activities (such as tourism). In this way, small local airports indirectly promote job creation and government tax revenue.

However, to make an effective investment decision, Mr Nguyen Van Vinh said that paying attention to 4 issues is necessary. Firstly, it is necessary to distinguish (concept) what is a small airport clearly; second, focusing on the efficiency of investment in construction, exploitation and operation (associated with transport organizations) will decide the investment and development of the airport; third, it is necessary to clarify the mode of development investment, whether, by the state, non-state sector or public-private partnership (PPP); The fourth is whether there is a need for mechanisms to encourage the foreign investment sector to invest, manage, operate and exploit.

According to Mr Pham Huu Son, General Director of Transport Design Consulting Corporation - CTCP (TEDI), open thinking will be what the consulting unit considers when assessing the opportunity to add some small airports in remote areas and islands into the national planning.

"The consultant's point of view is that if the new airports do not have conflicts in the airspace and there are businesses that commit to spending 100% of their investment capital, they can be considered and added to the planning," Mr Son proposed.