The new Tan Son Nhat airport terminal moves forward with ACV approved as its investor

The Airports Corporation of Vietnam has announced that it has received approval to be the primary investor in Ho Chi Minh City’s Tan Son Nhat airport’s third terminal. Lai Xuan Thanh, Chairman of ACV discussed a number of issues related to the third terminal’s construction and ACV’s business at a press conference that was held on Tuesday.

According to Thanh, ACV would invest in the third terminal as well as parking lots and other construction projects that are related to the terminal.

The construction and related expenses for the airports new runways are supposed to be the responsibility of the national government, however ACV is discussing with government authorities whether it should be responsible for the airport runway construction. 

ACV is concerned that any delays in arranging capital, or issuing bids for construction could prolong construction time and therefore increase the costs of the runways, terminals and related infrastructure projects. 

ACV, which manages 23 airports in Vietnam, has estimated that the third terminal expansion and increase in passenger capacity to 50 million people per year by 2025 means that there will be between 300,000 ~ 330,000 takeoffs and landings each year at the airport and that this requires both upgrades and expansion of the current runways.

Last week, the government announced that it would need a minimum of $180 million USD to repair two damaged runways, one each at Hanoi’s Noi Ban airport, and HCMC”s Tan son Nhat airprot. 

In the press conference, ACV’s Thanh said that an airport construction should ideally be invested in entirely by one main company, which can be more streamlined and efficient in managing the construction project. Thanh affirmed said that ACV has the financial capability to build the new terminal and invest in the runways. 

Thanh said that ACV has $3.75 billion USD available to use by 2025, and that the costs for the new terminal and runway upgrades are estimated at $ 2.67 billion USD. ACV will use the remaining funds for investment into the Long Thanh International Airport, beginning in 2021.

When discussing the investment in Tan Son Nhat’s runways, Thanh sais that “We can invest in the airport instead of the state, but we need permission and a mechanism to recover our investment.”

Jonathan Hanh Nguyen, Chairman of Imex Pan Pacific Group (IPPG), is interested to partner with ACV in the Tan Son Nhat terminal project and said that since ACV is a partner of the government in many aviation projects and has the money to develop the terminal, runways and related construction that it should be given authorization to move forward. 

Nguyen also said that if IPPG were to join, the upgrade of Tan Son Nhat, that it would take three years to complete construction and that he new runways and terminals could be operational in 2022 or 2023. 

Le Dinh Tho, Vietnam’s Deputy Minister for Transportation (MoT) has said that the MoT is studying plans to use private funding instead of the state budget for the project. The MoT plans to present a plan to the government in early April that will propose change in regulations so that a company can invest in an airport project entirely. The Van Don airport, which has been built by a private company is being used as the case study for new MoT guidelines.

ACV submitted a pre-feasibility report for the T3 terminal and related constructions at the Tan Son Nhat airport in January and estimated the costs for the terminal at $492.47 million USD, which it would fund on its own.

The MoT has approved Tan Son Nhat expansion so that it has the capacity to handle 50 million passengers in 2025. The two current terminals, with upgrades, are expected to handle 30 million passengers, with Terminal 3 projected to handle 20 million passengers. 

Tan Son Nhat international airport was designed with a maximum capacity for the two terminals of 25 million passengers per year. In 2017 the airport handled more than 38 million passengers and passenger growth is increasing at a rate of more than 6% a year, so a third terminal and new runways are urgently needed.

The Civil Aviation Authority of Vietnam (CAVV) conducted a survey recently and the results said that because of the airports weak infrastructure and overcapacity that Tan Son Nhat is ranked the lowest among Vietnam top six airports.