Vietnam News

Vietnam flies into airport projects despite COVID travel slowdown

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Communist government lacks flexibility for reviewing questionable projects

Vietnam has started building a new international airport near the commercial powerhouse of Ho Chi Minh City, despite the drastic slump in air travel due to the pandemic.

The country will also expand the city’s existing airport despite a clouded future for the airline industry.

Ho Chi Minh City’s ambitious airport projects will boost the passenger capacity 150% by the mid 2020’s. But many analysts say the pandemic has cast serious doubts over these two massive investments.

Construction of Long Thanh International Airport in Dong Nai Province, 40 km east of the city, was approved in 2015 by the National Assembly, the nation’s parliament.

Phase one of the project will involve building a 4-km runway, passenger terminals and other facilities capable of handling 25 million passengers a year at a cost of $4.6 billion. The airport will open in 2025.

Long Thanh will be developed in three phases at a total investment of $16 billion, according to Airports Corporation of Vietnam.

When fully completed in 2040, it will be one of the biggest airports in Southeast Asia, featuring four runways, four passenger terminals and an annual capacity of 100 million passengers — roughly the same size as the country’s population.

In a January groundbreaking ceremony, Prime Minister Nguyen Xuan Phuc touted the airport as “one of the largest infrastructure projects” in Vietnam.

At the same time, existing Tan Son Nhat International Airport will be expanded with an investment of $500 million. Construction on a third terminal will start by summer. Scheduled to complete in 2023, the expansion will increase annual capacity 70% to 50 million passengers.

The airport served more than 40 million passengers in 2019, far more than its current capacity. The congested flight schedules caused delays on a daily basis, forcing the current expansion.

But global air travel has changed dramatically since then due to the pandemic. Passenger volumes in 2020 are estimated to be about half that of 2019.

Industry analysts predict only a slow recovery in air travel for 2021 and the near future. Some industry executives argue Vietnam should postpone airport projects in response to an uncertain market.

Legacy thinking and a centrally planned economy reduce flexibility when deciding policy in Vietnam, a single-party communist state. Changes to ongoing national projects cannot be easily undone once decided.

The Vietnamese Communist Party’s 13th Party Congress — a key event held every five years — ended on Feb. 1 with the election of a new politburo.

An executive at a Japanese trading company says the leadership transition is making it all the more difficult for the country to change plans.

By Tomoya Onishi – Nikkei Asia – February 21, 2021

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