Tuesday, January 08, 2008

After 2010: Vietnam may not have enough parking lots for aircrafts

VietNamNet Bridge – Experts have warned that Vietnam may lack parking lots for aircrafts after 2010, especially when the aviation market maintains robust growth.

The national flag air carrier Vietnam Airlines has signed a series of contracts on purchasing new-generation aircraft in an effort to improve its fleet. It is expected that the airline will have 86 aircraft by 2015.

Meanwhile, Pacific Airlines has signed a series of contracts on chartering aircraft. The airline expects to get five aircraft a year, and will charter 30 units by 2014. Vietjet, the newly established airline, is expected to have some 10 aircraft.

As such, the lack of aircraft will not be the biggest worry for Vietnam, while the biggest problem will be the lack of parking lots for aircraft.

There are now 22 airports nationwide, including five international airports and 17 domestic ones. Most of the airports in the south have become old, which were built by the US in the Vietnam war. In the north, Noi Bai, the biggest international airport, has also become old since it was built in the 1960s. Meanwhile, the aviation industry has been witnessing robust growth in the last few years. Vietnam Airlines has just welcomed the 8-millionth traveler, while airports have welcomed the 20-millionth traveler.

Experts said that the lack of parking lots is now not so serious with 50-55 Vietnamese owned aircraft (international airlines never park their aircraft overnight in Vietnam for international flights). However, the situation will become more serious after 2015.

Parking in nearby airports?

Lai Xuan Thanh, Deputy Head of the Civil Aviation Administration of Vietnam (CAAV) acknowledged that the lack of parking areas for aircrafts has been anticipated.

Several hundred thousand billion VND needed to develop airports’ infrastructure

Under the strategy on airport network development, by 2020, Vietnam will put 26 airports, including 10 international and 16 domestic ones, into operation.

The total estimated capital for priority projects by 2020 is expected to reach VND221,500bil, of which VND38,500bil will be needed in the period from now to 2010, and VND183tril in 2011-2020.

It will take VND117tril to develop the fleet, VND88,500bil to develop aviation infrastructure and VND11tril to develop the aviation industry.

The main sources of capital will come from state budget, ODA, enterprises’ capital, BOT and bonds

He said that though heavy investments have been made, the two most important Tan Son Nhat and Noi Bai airports remain overloaded where there is not enough room for parking aircraft. Tan Son Nhat airport, for example, only has enough parking areas for 145 flights taking off or landing in every day. Noi Bai airport, which has 21 parking lots, has to serve 85 flights a day.

An official from CAAV said that in order to deal with the lack of parking lots, it is necessary for airlines to park aircraft at the nearest airports. Airlines should think of parking their aircraft at some local airports, like Chu Lai or Cam Ranh, which have large parking lots, while they should not expect that the upgrading of Noi Bai or Tan Son Nhat airports can be completed in a short time.

In developed countries, airlines have their owned bases for aircraft, and not all aircraft park in the capital city. American Airlines, for example, one of the biggest airlines in the US, has the base not in Washington or New York, but in Dallas.

Therefore, experts said that Vietnamese airlines should also think of setting up their bases for aircraft in other localities instead of Hanoi or HCM City. If Tan Son Nhat airport serves as the base of Vietnam Airlines, Pacific Airlines should find another base for it, Da Nang or Cam Ranh.

Where does capital come from?

Pham Ngoc Minh, General Director of Vietnam Airlines, said that airports have been focusing on building and upgrading terminals, while not paying appropriate attention to expanding parking lots for aircraft.

In the latest news, CAAV has reported about the anticipated lack of parking lots to the Government. In response, the Prime Minister has decided to develop the 30 ha land plot on the Tan Son Nhat airport’s area now put under the control of the Ministry of Defence into parking lots for aircraft. It is expected that some 50 places for aircraft parking will be created on the new area.

In the near future, when the Long Thanh airport in Dong Nai province becomes operational in 2011, which can serve 80-100mil passengers a year and have the parking lots large enough for several hundred places, the lack of parking lots will be eased.

As for Noi Bai airport, CAAV plans to build up a new parking lot for five big-size aircrafts, scheduled to kick off in 2008.

However, the biggest problem now is how to call for capital. It is estimated that some VND400bil will be needed to develop infrastructure base for aviation industry. Meanwhile, the state budget only allocates dozens of billions of VND a year on airport infrastructure.

Besides, the Government has also asked to complete the construction T2 terminal at Noi Bai airport (which can serve 15mil passengers a year) with the 11-place modern parking lot, eligible for A380s as well.

Experts said that Vietnam should think of calling capital from different sources instead of relying on the state budget as currently. However, Vu Pham Nguyen Tung, Head of the Airport Management Board under CAAV, said that it is very difficult to attract investment in airport infrastructure.

In fact, neighboring countries including Thailand and Indonesia also find it hard to call for investment in airports. It took Thailand 20 years to build Sunwanaphumi airport to replace Don Muong airport, and the country had to mobilize capital from different sources, including ODA, bonds and funding from big financial groups.

Another big problem of Vietnam’s airports is that the service fee the airports can collect just accounts for a small proportion, at 20-30% of total receipts (the figure is 60-70% in other countries). Therefore, the airports do not have money for re-investment.