Vietnam gets go-ahead for huge airport as capacity woes mount

Reuters News
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Posted: Jun 25, 2015 7:33 AM

By Martin Petty and Mai Nguyen

HANOI (Reuters) - Vietnam plans to build an ambitious new $16-billion airport as an eventual competitor to sprawling airline hubs in Bangkok and Singapore, on a site that is bigger than both combined.

Vietnam's airline market is growing at the third-fastest pace in the Asia-Pacific region and the communist country wants a quick start on its Long Thanh International Airport.

Approved on Thursday with a parliamentary majority, the airport near the economic hub of Ho Chi Minh City is Vietnam's biggest and most long-drawn-out infrastructure project, designed to tackle chronic capacity shortages.

Construction of Long Thanh's terminal and runways will start in 2018, with 4,200 affected families having to be relocated from a 50-sq-km (19-sq-mile) site.

That area compares with Singapore's Changi airport, on 13 sq km (5 sq miles), and Bangkok's Suvarnabhumi airport, on 32 sq km (12 sq miles).

"When looking at the population and economic growth, Vietnam has a lot of potential," Lai Xuan Thanh, director general of the Civil Aviation Administration of Vietnam, told Reuters.

"Infrastructure is one of the reasons Vietnam has yet to exploit that potential in the air transport market, so Long Thanh is strategic," he added.

France's Aeroports de Paris SA is interested in Long Thanh but first wants to become a strategic investor in state-run airport operator, Airports Corporation of Vietnam.

The airport operator is to submit a privatization plan to the government this month, Thanh said.

Approval for the airport is a feather in the cap for the ruling party's pro-business elements, amid an anticipated jockeying for key positions as a five-yearly change in leadership draws near.

Long Thanh is to be built in three phases over three decades, to reach a targeted annual capacity of 100 million passengers and five billion tonnes of goods.

Stage one, running from 2018 to 2025, will cost $5.4 billion, and on completion, will handle 25 million passengers and 1.2 billion tonnes of goods a year.

Thanh said its funding would come from a combination of state budget, foreign and domestic private investment and overseas development aid.

The next two phases will run from 2030 to 2035 and from 2040 to 2050.

Long Thanh will take up the overflow from Ho Chi Minh City's Tan Son Nhat, which is expected to be overstretched by 2017.

Tan Son Nhat will handle chiefly domestic flights. It has few expansion options, with the urban sprawl of the former Saigon engulfing what was once a base for U.S. military during the Vietnam War.

In December, Hanoi's Noi Bai Airport opened a second terminal worth $900 million, and a new highway link, nearly doubling annual capacity to 22 million passengers.

Since 2011, new international airports have opened in Danang, Can Tho and Phu Quoc.

(Editing by Clarence Fernandez)