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Vietnam plans to upgrade three international airports

The Civil Aviation Administration of Vietnam (CAAV) has recently submitted to the Ministry of Transport a plan to upgrade three international airports near Vietnam’s top tourist destinations from now to 2020 with a total cost of over VND23.3 trillion (US$1.03 billion).

The CAAV said that the money would be spent at Cat Bi Airport, which is 70 kilometers from Ha Long Bay; Phu Bai Airport just outside the former royal capital Hue; and Chu Lai Airport, 77 kilometers south of Hoi An.

The investment will be mainly spent on building new terminals, runways and taxiways.

Under the plan, Cat Bi airport will need more than VND6.2 trillion while the amount for Phu Bai and Chu Lai will be over VND6 trillion and VND6.6 trillion, respectively.

The CAAV has also proposed to assign the Airports Corporation of Vietnam (ACV), which is the monopoly operator of 22 domestic airports, to act as the investor of the projects’ main items worth VND18.9 trillion.

According to Vu The Phiet, ACV’s Deputy General Director, ACV do not use budget capital for the projects’ investment but using corporate capital.

The CAAV said that the upgrade is aimed to prevent the airports, which are near popular tourist destinations of Ha Long, Hoi An and Hue, from getting overloaded in the next few years.

It said that Phu Bai and Chu Lai were operating far above capacity last year, while Cat Bi, which offers the shortest route to Hai Phong, is likely to be overloaded next year.

Vietnam’s aviation market is growing at the third fastest pace in Asia-Pacific and the country is grappling with an acute dearth of airport capacity.

Aviation authorities estimated that the number of passengers on domestic flights soared 35 percent to 28 million in 2016, accounting for more than half of the total air travel in the country.

Airports across the country served more than 55 million passengers during the first seven months of this year, according to the CAAV. The number in July alone reached 9.1 million, up 12.2 percent against the same month last year.

In March, the Airports Corporation of Vietnam asked for VND32 trillion ($1.4 billion) from the state budget to upgrade large airports across the country. The funds would be allocated for runway improvements, terminal and airfield expansions as well as facility upgrades over the next four years.

Do Quoc Binh of Airports Corporation of Vietnam (ACV) suggested that airports could recoup the costs of the investment by raising airport charges and fees.

The boom in Vietnam’s aviation market is forcing ACV to search for additional capital to pour into its overcrowded airports. ACV’s Aeroports de Paris early this year purchased a 20 percent stake in the company, reducing state ownership to 75 percent.

Last year, ACV sent a plan to the transport ministry in which it said that airport charges for domestic flights should be raised. The plan has yet to receive government approval.

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