Last update 2/19/2012 2:23:00 PM (GMT+7)

Despite loss, Vietnam continues building more airports

VietNamNet Bridge – Airport develop enterprises still keep spending money to build small airports, even though the small airports have low capacity, because they still can make profit in the whole network.

There are too many airports in Vietnam

The ceremony on starting the project on the Tuy Hoa airport in Phu Yen province, which took place last week, raised some worries and surprised many people. They cannot understand why Vietnam continues injecting money in airports, though airport developers all have reported big losses.

With the Tuy Hoa airport project, the Southern Airports Corporation SAC will basically complete the upgrading of nine airports in the region put under the management of the corporation.

This is a noteworthy thing is that this would be the last project to be implemented by SAC before it merges into two other airport corporations.

At present, the Tuy Hoa airport is developing the air routes from Hanoi to HCM City, serving 2-3 flights a day and 60,000 passengers a year. After it is put into operation, slated for the third quarter of 2013, the Tuy Hoa airport would serve 555,000 passengers per annum and 300 passengers at the same time in peak hour.

Though the capacity is expected to increase by nine folds, SAC still would not expect profits from aviation and non-aviation services from the airport.

Nguyen Nguyen Hung, General Director of SAC, said on Dau tu that the more investment it makes in airport development, the heavier finance burden it would bear. Currently, SAC still has to use the profits from the Tan Son Nhat airport to offset the losses from the other eight localities.

Why is SAC so overzealous to make investment in a small airport like Tuy Hoa?

According to Hung, developing the airport is a political and social duty, because the airport is a part of the strategy on the Phu Yen provincial socio-economic development. Besides, the upgrading of the Tuy Hoa airport would help increase the number of flights to and from HCM City, which would help bring more turnover.

SAC’s report showed that the pretax profit of SAC still reached 200 billion dong.

Dinh Viet Thang, Deputy Head of the Civil Aviation of Vietnam, has affirmed that using the profits from big airports to offset the losses of small airports is the way airport development enterprises in the world is following.

He also said that the domestic market shows its great potentials, and if developing well, the flight frequency would increase, thus bringing high socio-economic efficiency.

Prior to that, replying to the criticism that Vietnam is wasting money on building airports, and that there are too many airports in Vietnam, Deputy Minister of Transport Pham Quy Tieu said on An ninh Thu do that it is still necessary to maintain the operation of the airports in order to implement political, social and economic duties.

Tieu has also affirmed that Vietnam does not have excessive airports, saying that the airport development has been outlined with the forecasts about the demand by 2020 and 2030. He also said that Cambodia, which covers an area of 181,000 kilometers, has 18 airports.

However, SAC has proposed the Ministry of Transport and relevant ministries to adjust the pricing mechanism in order to ensure that the prices can cover expenses.

The Middle Region’s Airport Corporation has also asked the ministry to propose the Ministry of Finance to adjust the aviation service fees at the Phu Cat airport in Binh Dinh, so as the corporation can collect higher fee which deserves the high quality of services it provides.

An official of the Civil Aviation Authority of Vietnam CAAV has agreed that adjusting the service fees is a necessity in order to help enterprises reduce losses. Besides, this would also help attract foreign direct investment into the field.

C. V