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Can Tho’s new air route subsidy plan stirs controversy

access_time May 17,2017 chat_bubble_outline 21 views

Authorities of the Mekong Delta city of Can Tho have offered to assist airlines in recouping potential losses from future flight routes to the city. However, the proposal has drawn the public and expert opposition.


Can Tho’s new air route subsidy plan stirs controversy

Can Tho International Airport


Vo Thanh Thong, chairman of Can Tho City People’s Committee, said the city was considering how to support airlines to open more air routes. 

The Can Tho Transport Department has been assigned to gathering feedback from the public for the support which uses the state budget. 

  

According to Can Tho City’s plan, airlines will be given support to open new offices and advertise. During early days when the routes are first opened if the empty seats account for more than 30% of the total seats then the authorities will provide financial support to offset some losses for flights from Can Tho Airport.

It is estimated to cost the city VND5bn (USD220,000) to offset losses for each airline with new domestic routes during the first year and VND8.5bn for each airline with international routes. Thong noted that the maximum amount the city would need to earmark VND5 billion (USD223,200) a year for domestic services and VND8.5 billion (USD379,460) a year for international routes.

Unreasonable

Associate Prof. Nguyen Thien Tong, a former lecturer from the HCM City University of Technology’s Aviation Engineering Department, said that the air travel demand in Vietnam’s southwestern region has been on the sharp rise; but in reality, the operation efficiency of Can Tho International Airport remains low. So the problem is how to operate airport better.

“To launch a service, airlines obviously have to consider its efficiency and it is unreasonable to use the state budget to offset for their losses,” Tong added.

A report by Airports Corporation of Vietnam indicated that by late 2015, only big airports such as Noi Bai and Tan Son Nhat made profits, meanwhile, smaller airports suffered from losses as they served only a small number of passengers.

For instance, Chu Lai Airport in Quang Nam Province only serves around 8% of the designed capacity of around 500,000 passengers annually. The passenger rate for Can Tho Airport is 15% and other airports such as Tuy Hoa, Lien Khuong, Ca Mau, Rach Gia, Dien Bien and Dong Hoi saw the rate of 11-37% compared to the designed passenger capacity.

Meanwhile, a range of projects to expand and build airports have been underway or to be carried out. This year, the three northwestern airports namely Na San, Lai Chau and Lao Cai with a total investment capital of nearly VND10 trillion (USD460 million) are scheduled to be built. Van Don International Airport in Quang Ninh Province is also slated to be operational in 2017. Thanh Hoa Province is seeking the government’s approval to upgrade Tho Xuan Military Airport into the international level.

Wastefulness

Economist Bui Trinh from the General Statistics Office of Vietnam mentioned a current trend in Vietnam that many localities are rushing to build expressways, airports, monuments or statues without careful consideration about their point, creating unnecessary government debt.

The Hanoi-Haiphong Expressway has been open to traffic since early 2016, cutting travel time from Hanoi to Haiphong to less than two hours. Many people in Hanoi’s neighbouring localities can get to Noi Bai International Airport, instead of choosing Cat Bi Airport.

“The distance between two cities is around 130km, so it is unnecessary to build their own airports. It is more important to build good roads for people to travel more easily,” Trinh noted.

Associate Prof. Nguyen Thien Tong disagreed with the plan to build three northwestern airports, saying that the investment instead should be used to develop road networks.

“It is important to consider the responsibility of investors of loss-making airport projects as well as agencies which approve them. It is essential to define the interest groups of these kinds of projects,” Tong highlighted.  

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