With traffic across Asia-Pacific rising by 8% to 2.67 billion passengers in 2015, there is little doubt that the region remains one of the global hotspots for traffic growth and is likely to remain so for the foreseeable future.
The total cemented Asia-Pacific’s status as the world’s biggest aviation market and arguably acted as another timely reminder that the region has to continue to develop its airports to ensure that it has the capacity to avoid becoming a victim of its own success.
Many of the biggest airports are already doing this, of course, as the huge ongoing or recently finished development projects in Australia, Bahrain, China, Hong Kong, Saudi Arabia and the UAE testify, but what about elsewhere in the region and in particular some of the fast developing countries?
Well, as you would expect, it is very much a mixed bag with a number of different projects planned, underway or in the pipeline, although finding the funds to carry out the work, like elsewhere in the world, remains the biggest obstacle to their development.
And this is a slight worry as according to a new report looking specifically at airport development in South East and East Asia, capacity constraints at many major airports are slowing growth.
In terms of what is being planned today, the Brooks Market Intelligence report, Airports in South-East and East Asia, Capital Investment Programmes – 2016, notes that the general upward trend in passenger traffic, fuelled by the liberalisation of air travel and trade and increased economic activity across the region, has led to a number of ASEAN countries taking steps to increase their airport capacity.
The report covers developments in ASEAN’s ten member countries (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) as well as Japan, South Korea, Taiwan and Timor-Leste.
Below we review a snapshot of the report’s findings on what is going on in two ASEAN countries – Myanmar and Vietnam.
Winds of change in Myanmar
Times are certainly changing for The Republic of the Union of Myanmar, formerly Burma, which has plans to build new airports and upgrade others in a bid to enhance the country’s aviation infrastructure.
The nation’s principal gateways today are Mandalay International Airport, which serves the main tourist centre, and the capital‘s Yangon International Airport
However, with tourism expected to soar from 4.2 million visitors in 2013 to 30 million by 2030, Myanmar’s government is acutely aware of the need for more airport capacity.
Indeed, a third international airport capable of handling up to 3.5mppa was opened in Naypyidaw in 2011, and contracts have been awarded for the expansion of Yangon and Mandalay airports and the construction of a new hub to the northeast of Yangon.
And the Department of Civil Aviation (DCA) is expected to seek local and foreign finance for the upgrade of 39 underdeveloped domestic airports.
The development of Myanmar’s eagerly awaited new Hanthawaddy International Airport appears to be back on track after an early setback when the preferred bidder chosen by the government – a South Korean consortium led by Incheon Airport –
decided not to take up the option of building, operating and maintaining the $1.5 billion gateway.
Now the contract has been awarded to a consortium comprising Singapore’s Changi Airport Planners and Engineers (CAPE), Yongnam Holdings of South Korea and Japan’s JGC Corporation and construction of the 12mppa capacity gateway is finally expected to begin in 2016 paving the way for a 2020 opening.
Set to be located in Bagu, 50 kilometres north east of Yangon, the initial cost of Hanthawaddy will be equally split between the consortium and the Myanmar government, which has secured an Official Development Assistance (ODA) loan from the Japanese government for 40% of the $750 million it needed to fund the project.
When completed, the new airport will be the country’s largest and will replace Yangon Mingaladon Airport as the main gateway into Myanmar. A second development phase could raise its passenger capacity to 30 million per annum.
Elsewhere in Myanmar, a consortium comprising Jalux, Mitsubishi Corporation and local company SPA Project Management Ltd has signed a concession agreement to operate Mandalay International Airport for 30 years and began work on a $135 million project to raise the gateway’s capacity to 3mppa last year.
While Yangon International Airport is set to get a near $200 million facelift in an expansion programme financed by an international consortium led by Pioneer Aerodrome Services Co, an affiliate of Asia World, a major Myanmar conglomerate.
The upgrade will result in a new domestic terminal and additional apron that will allow the airport to handle up to 6mppa. It welcomed 4.3 million in 2014.
Investing in Vietnam
These are heady days for Vietnam, which has a rapidly growing aviation market and, according to a prediction from Goldman Sachs, will become the world’s 21st largest economy by 2025.
To meet the growing needs of the country, the government has developed a draft plan for air transport that estimates that it will cost in excess of $10.2 billion to develop an airport network of at least six international and 18 domestic gateways.
The lion’s share of the investment is expected to come from ODA loans from foreign governments such as Japan, as well as financing from the private sector. Foreign investors will, however, be allowed to develop some airports under the Build-Operate-Transfer (BOT), Build-Transfer (BT), or Build-Operate-Own (BOO) concepts. The newly created Airports Corporation
of Vietnam (ACV) is currently responsible for managing and operating the nation’s 21 existing commercial airports, which include eight international and 13 domestic facilities.
It has raised close to $50 million from an IPO for 25% of its shares and recent media reports in Vietnam suggest that the government is seeking private investors to buy another 20% stake, which would help fund its ambitious airport development plans.
One of the country’s newest high-profile developments is the $900 million Terminal 2 at Hanoi’s Noi Bai International Airport, which nearly doubled the capacity of the gateway when it opened just over a year ago.
The new 10mppa capacity terminal covers 140,000sqm across a main building and two piers that between them feature 96 check-in counters, 17 boarding gates and 283 flight information display system (FIDS) screens.
Ho Chi Minh City’s Tan Son Nhat International Airport opened the first phase of its expanded Terminal 2 last year and will complete the job this year. However, with little land left for further development, the government has decided to build a replacement hub for international services 50 kilometres north of the city.
If all goes to plan Vietnam’s new $5.5 billion super hub could ultimately boast three terminals and four runways between them capable of handling up to 100 million passengers annually, although it is likely to have just a single passenger complex and two runways designed to accommodate 20mppa when it opens in 2025.
Tan Son Nhat is likely to become a domestic airport after the first phase opening of the eagerly awaited Long Thanh International Airport, which will eventually replace it.
Elsewhere in Vietnam there are plans for a new international terminal for Danang International Airport, which will raise its capacity to 10mppa by June 2017, while a terminal revamp and two new runways are on the cards for Chu Lai International Airport in a $520 million project.
The government is also seeking foreign investors to develop Hue’s Phu Bai International Airport into a gateway capable of handling 5mppa and wants to build new airports for Ha Long City – in the eastern province of Quang Ninh – and Lao Cai, in its northern border province with China, by 2025.