How much are airports really worth?

But it is still unclear how the airports’ worth should be assessed before they are transferred to private investors.

Experts have warned that the involved parties, including MOT and the investors, will have to follow complicated procedures to conduct a transfer of operation rights since this would be unprecedented in Vietnam.

Vietjet Air, the private air carrier, has officially asked for preferential concessions to invest in the new T1 terminal and the old T2 terminal at Noi Bai airport for a 20-year period.

Le Van Tang, director of the Ministry of Planning and Investment’s (MPI) Bidding Management Department, thinks there should be a division in charge of assessing airports which would serve to define the “selling price”, and that the division should be set up by the Ministry of Finance.

Tang noted that it was a complicated process because the value of the airports involves tangible as well as intangible values, including brand names.

General Director of the Airports Corporation of Vietnam (ACV), Le Manh Hung, said ACV had been assigned by MOT to work out a procedure for airport transfer.

Phu Quoc Airport would be the first airport to be transferred to private investors for a fixed time.

Hung said ACV needs to consider many technical issues of the transfer process, from airport assessment, bidding mechanism and the post-transfer state management method.

Tang from MPI noted that the airport operation rights transfer could be implemented in accordance with current regulations on bidding and state-owned asset bidding, and with the newly enacted government decree on PPP-based (private public partnership) investments.

A new investment mode – O&M (operation and management) – is mentioned in the decree. O&M contracts are signed between state management agencies and investors, under which the investors have the right to exploit parts or entire state-funded infrastructure works for commercial purposes for certain periods.

Tang said the regulation would be applied not only to airports, but also to other state-funded infrastructure works. The State, for example, after building a road, would offer concessions to investors along the road for commercial development.

When asked about how to choose investors, Tang said bids would choose investors.

“You will also have to attend the bidding even if you are the one who suggests the concessions,” he said.

However, he noted that the investors who make suggestions would be able to enjoy some preferences.

“You will not be sure that you will get the concessions even if you are the only investor,” he added. “State management agencies will consider the prices and conditions to be offered by investors in making decisions.”