Vietnam’s Ministry of Transport has announced that it plans to spend $15.4 billion USD (350.5 trillion VND) to develop the country’s aviation industry between 2018 and 2030 including allocations of almost $4 billion USD (84.4 trillion VND) during 2018 and 2019.
The investments are part of the ministry’s revised draft plan on aviation transportation development. The plan was sent to the Government for approval and is aimed at both improving Vietnam’s airport and airline infrastructure so that the country’s domestic and international tourism can continue to grow, as well as expediting growth in commercial airline transportation.
Under the revised plans, the aviation industry will expand current operations at 23 airports across the nation and is expected to accommodate 144 million airline passengers by 2020. By 2030, the government expects the country to have 28 airports in operation that will accommodate 308 million passengers.
Nguyen Van Cong, Vietnam’s Deputy Minister of Transport said the draft plan was updated with input from the Science and Aviation Technology Association and Aircraft Design and Consultancy Company Ltd and that “A revision in the plan is needed, that creates a legal framework to develop aviation transportation in the future and ensure sustainability and safety.”
Vietnam’s aviation market has grown dramatically over the last 5 years; international arrivals to Vietnam in 2017 increased to almost 13 million passengers in 2017; and the country is ranked # 5 in air transport in ASEAN. However, many international airlines that fly to other countries in the region such as Singapore and Thailand have been reluctant to schedule flights into Vietnam due to the overcrowded airport facilities so expansion and upgrades of the Hanoi, Ho Chi Minh City and Da Nang international airports is crucial to Vietnam’s continued tourism and commercial aviation growth.
International airlines who are reluctant to enter the Vietnam market often state that the infrastructure of airports across the country fail to meet modern consumer standards; that current consumer demand already results in overcrowding at the countries airports and that the airport infrastructure cannot realistically accommodate new airlines.
Under the plan submitted to the government, the MOT has set a goal for Vietnam to be among the top four “air transportation” nations in ASEAN by 2030. In order to accomplish this goal, there will be major upgrades at Hanoi’s Noi Bai airport; Ho Chi Minh City’s Tan Son Nhat airport and at Da Nang international airport. Additionally the government will open three air transport logistic centers in Van Don, Chu Lai and Long Thanh.
The Ministry of Transport predicts that the transport of passengers via domestic airlines will increase at an average rate of 16% from 2018 ~ 2020 and by 8% during the period of 2020 ~ 2030. Airline transportation of goods is also expected to grow at an annual rate of 18% from 2018 to 2020 and at 12% annually from 2020 ~ 2030. Domestic airlines are expected to reach a volume of 64 million passengers by 2020 and 130 million annually by 2030.
Vietnam currently has four licensed airlines – Jetstar Pacific Airlines, Vietnam Airlines, Vietjet Airlines and Vietnam Air Services Company.
In order to create new opportunities for investors to enter the aviation market, the MOT states that the first priority is to increase the capacity of existing airports and to expand the scale of aircraft fleet in the next three years. Under the MOT plan, aircraft fleet development is projected to grow by 220+ units by 2020 and 400 units by 2030.
One of the key requirements for a new airline to receive investment certification and enter the market is that the project must be suitable with the aviation industry’s development. According to the MOT, two of Vietnam’s airlines are in violation and
Vietstar Air and Bamboo Airlines have both met the requirements related to capital and flying capacity yet both airlines have failed to receive their licenses. In 2017 the government announced it would not approve either airlines investment plans and grant business licensees unless they agreed to build additional terminals and airfield facilities in accordance with the planning of Tan Son Nhat International Airport.