American Shipper

IATA chief worried about Vietnam airport privatization

   Vietnam should be careful about going forward with plans to privatize airports, International Air Transport Association Director General Tony Tyler said in a keynote address at Vietnam Aviation Day.
   “Vietnam is a dynamic and rapidly growing aviation market. The successful development of aviation will pay big dividends to the Vietnamese economy. It must be treated as a strategic asset and handled correctly,” Tyler said, according to a copy of his speech.
   Vietnam ranks 82nd in infrastructure in the World Economic Forum’s Global Competitiveness Report. It is addressing the situation, in part, with an aviation master plan to have 26 airports by 2020. Expansion programs are underway at Hanoi and Ho Chi Minh airports, with the new Long Thanh International Airport to be ready by 2020. 
   Tyler cautioned Vietnamese officials to be careful about changing the structure and ownership of Vietnam’s airports. Vietnam has indicated plans to open its airports to foreign investment and management, and to privatize the Airports Corporation of Vietnam.
   “While airport privatization can provide access to the capital needed for infrastructure programs, we have seen enough spectacular examples of unintended negative consequences to urge caution,” Tyler said. The biggest problem, he noted, has been increases in charges or under-investment in the capital budget as the private operator tries to wring more profit out of the operation.
   “To balance the market power of privatized airports, Vietnam needs to establish an effective independent economic regulator that is in line with well-established international norms. That should bring about fair charging schemes aligned with International Civil Aviation Organization policies. Lower charges will also improve the viability of routes and allow Vietnam to reap the benefits from enhanced connectivity and increased traffic,” said Tyler. ICAO’s policies on charges are based on the principles of non-discrimination, cost-relatedness, transparency and consultation with users.
   Electronic airway billing could also help boost air cargo in Vietnam, Tyler said.
   Air freight accounts for a very small amount of Vietnam’s trade by volume, but represents 25 percent of its trade by value ($29 billion). Vietnam Airlines has been able to use paperless documentation for domestic freight, but has been unable to do so internationally because Vietnam has yet to ratify the Montreal Convention 99, which provides the legal framework for the use of electronic documents of carriage, he said. Ratification would bring greater efficiency to Vietnam’s air cargo sector, he added.
   The IATA chief also urged Vietnamese airports to build in more self-service options such as tagging of baggage and to ease visa requirements to make it easier for tourists to visit the country.