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Congestion in aviation infrastructure needs resolving

SGGP
Does aviation industry develop too rapidly? Are flight tickets sold lower than cost prices? Why does authority continue to grant permission for new airlines enterprises while infrastructure is overloading? These were hot issues that received special attention at the talk ‘ Vietnam Aviation Industry: Opportunities and Challenges’ held by the Ministry of Transportation on December 11 in Hanoi.

Tan Son Nhat Airport has been overloading and waiting for upgrading and expansion. (Photo: SGGP)

Tan Son Nhat Airport has been overloading and waiting for upgrading and expansion. (Photo: SGGP)

Amid opinions that Vietnam’s aviation market has developed too rapidly, Mr. Dinh Viet Thang, head of the Civil Aviation Administration of Vietnam (CAAV), said that the aviation market has been posting good growth and under control with ensured safety and profits for carriers. The Vietnamese aviation market still reflects correctly rising demand of the economy and is in line with annual economic growth rate.

However, representatives of state management agencies, experts and enterprises thought that although the development of Vietnam’s aviation market is still under control, rapid development has been causing intense pressure on infrastructure. If this issue is not solved soon, it will cause lots of consequences. Among the network of 22 airports, overloading situation mainly happens at two major airports Noi Bai and Tan Son Nhat, of which the situation is worse at Tan Son Nhat Airport. Mr. Lai Xuan Thanh, chairman of the Board of Management of the Airports Corporation of Vietnam, said that lots of foreign airlines wanted to fly to Tan Son Nhat Airport but the airport cannot provide more slots. This year, the capacity of Tan Son Nhat Airport provided for airlines enterprises merely rose by 2-3 percent, causing growth of this airport to be at around 5 percent.

The obstruction in infrastructure that needs solving at the present is determined to be Tan Son Nhat Airport. Experts said that it is essential to clarify why there was already a plan to expand Tan Son Nhat Airport three to four years ago but it has not been carried out. Mr. Dinh Viet Thang said that the reason lies in mechanism and policy. The mechanism modification will be included in the amended Civil Aviation Law. However, according to experts, it cannot resort to traditional measures to quickly resolve the problem of Tan Son Nhat Airport. Not only expanding Tan Son Nhat Airport but Long Thanh International Airport also needs special mechanism in order to ensure completion and to be put into operation in 2025 as planned.

As for the establishment of new airlines, according to Mr. Thang, this is a positive signal. In developed countries, aviation market might be two to three times higher than population. Currently, Vietnam has more than 90 million people but aviation market merely reaches 78 million passengers. It is forecast that by 2025, the market might rise to 150-180 million passengers. With three enterprises proposing to open airlines, including Vinpearl Air, Kite Air and Vietravel Airlines, the country will have eight airlines, still lower than other countries in the region. Explaining why new airlines are granted permission while infrastructure is overloading, he said that during the process to consider and report to the Ministry of Transportation, the CAAV has evaluated market growth rate and the projects of new airlines do not focus on Tan Son Nhat Airport so there are still opportunities for development.

Amid concerns that new airlines will offer too cheap prices that are below cost prices, leading to the risk of unhealthy competition and difficulties in sustainable development, Mr. Thang said that cheap price should be recognized on the whole business performance of the airlines

In the market mechanism, price is decided by the airlines. If the airlines ensure its business performance and is able to maintain it for a long time, passengers will receive benefits from it. However, aviation expert Nawal Taneja also warned that no low-cost airlines maintains low prices forever but during its debut to eliminate its rivals then it will raise its prices.

Regarding the solution for Tan Son Nhat Airport, especially for the upcoming peak season, Mr. Thang said that this month Tan Son Nhat and Noi Bai airports will launch two airport operating centers called Airport Operation Control Center to establish a process to improve capacity and effectively use resources.

By Bich Quyen – Translated by Thuy Doan

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