Vietnam's Long Thanh International Airport will be constructed in the southern province of Dong Nai (Thanh Nien News, 13-Aug-2011). Vietnam Government reportedly plans to issue bonds, gain development assistance funding and seek private investment to raise funds to construct the airport( Reuters/Thanh Nien News/Vietnam News Agency, 13-Aug-2011). Construction will commence in 2015 with an initial investment of approximately USD6.75 billion. The first phase is scheduled for completion in 2020 with capacity to handle 25 million passengers p/a by 2020 and the airport will be able to accommodate A380 aircraft. Its capacity will reach 100 million passengers and five million tons of goods p/a by 2035. The airport is located 43 kms northeast of Ho Chi Minh City.
New airport near Ho Chi Minh City to commence construction in 2015; private investment to be sought
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The market has since more than doubled in size, and Vietnam has emerged as Southeast Asia’s fastest growing market. While there is further growth potential, the LCC incumbents VietJet and Jetstar Pacific have first mover advantage, and infrastructure constraints could make it difficult for any new entrant to establish a significant presence. AirAsia will also need to overcome regulatory hurdles.
Vietnam is the second largest market in Southeast Asia without an AirAsia affiliate - after Singapore, where the group has been able to develop a sizeable presence with a virtual hub. Vietnam is a market AirAsia strategically cannot avoid, but the group is late to the party and faces some of the same obstacles that have impacted its performance in the Philippines.
Southeast Asia aviation outlook: passenger growth accelerates, led by Vietnam, Myanmar and Malaysia
Southeast Asia’s aviation market recorded healthy growth in 2016, with passenger traffic expanding faster than the global average across nearly every country in the region. Six of Southeast Asia’s 10 countries had growth in or near the double digits, led by Vietnam and Myanmar. Seven countries had growth equal to, or higher than, in 2015.
Southeast Asia should continue to experience rapid growth in 2017 and beyond. Vietnam and Myanmar will likely again lead the pack in 2017, joined by Malaysia. The Philippines should experience growth of approximately 10% for the third consecutive year, also putting it towards the top of the pack.
However, overcapacity remains a long term concern, pressuring yields and profitability. The average profit margin of the Southeast Asian airline sector significantly lagged the global average in 2016, and this trend will likely continue in 2017.