Reforms Needed To Maximise Benefits Of Airport Privatisation


Vietnam's Ministry of Transport is awaiting approval from the prime minister of Vietnam, Nguyen Tan Dung, to partially privatise the country's state-owned airport operator, Airports Corporation of Vietnam (ACV). We believe that the plan to divest ACV is positive for the growth outlook of Vietnam's airport sector, but highlight that regulatory reforms are necessary to maximise the benefits of private sector participation.

According to Vietnam's Ministry of Transport (MOT), it is seeking to sell a 25% stake in ACV this year, with the government holding the remaining 75%. ACV currently manages 22 airports in Vietnam, with more than 50% of its revenues from the Tan Son Nhat and Noi Bai international airports.

We believe that the plan to partially privatise ACV is positive for the growth outlook of Vietnam's airport sector. In recent years, we have seen delays to several airport projects in Vietnam due to the lack of funds (see our Industry Forecast 'Transport Infrastructure - Q2 2014', January 16 2014). We have also seen the development of several airports - e.g. Dong Hoi airport - that have operated well below capacity and resulted in losses for ACV ( see our Industry Forecast 'Transport Infrastructure - Q2 2014', January 16 2014). Both scenarios took place despite the rapid rise in the number of international visitors into Vietnam and the increase in purchasing power among Vietnamese consumers ( see chart).

Growing Demand For Air Travel
Vietnam - International Visitor Arrivals And GDP per capita, US$

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This article is tagged to:
Sector: Infrastructure
Geography: Vietnam

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