What do you think about the growth of air traffic in Viet Nam with the ASEAN Single Aviation Market set to come into existence soon?

Brian Davis

I think it is not different from any other country where there is a lot of rapid growth, which is going to bring about challenges. Viet Nam's aviation market has been growing by an average 7-8 per cent per year in terms of passenger traffic, and this growth is expected to continue over the next 20 years. The country is one of the top 10 fastest growing aerospace markets in the world, so the main challenges for it will be to identify which types of technology to implement and the timing of that implementation, as well as how to deal with investment obstacles.

Some [domestic] discussions about privatisation, such as the Airports Corporation of Viet Nam (ACV) looking to privatise a percentage of the company, will bring about unique possibilities. There are great examples across the world of privatised air traffic control and airport management, and I think these approach something that may help accelerate the implementation.

How will the fast growing aviation market impact airlines and airports in the country?

The main challenge with growth is airport capacity, also referred to as throughput. If there is a finite amount of takeoffs and landings that an airport can deal with, that is going to be the ultimate constraint on how many airplanes can depart and arrive at the airport. Airports typically charge landing fees, and if they cannot accommodate additional aircraft, obviously they will not have a good landing fee base. More importantly, the throughput capacity also means the number of passengers coming to a terminal, so passenger facility charges and the amount of money that they may spend at two to three gift shops at the airport will also be constrained.

So it is not just a matter of air traffic. It is very important to understand that if an airport is constrained, there will be significant fallouts from that, and they can be revenue-related for the airport, and overall growth-related for the economy.

Viet Nam is stimulating private investment in the aviation industry, particularly via public-private partnerships. What factors impact the PPPs effectiveness?

The Government's responsibility for setting forth a good plan with an accurate vision of how air traffic and airport development should evolve is probably one of the key factors. The public-private relationship is ultimately going to want some type of return on investment. If there is no solid plan on specifically what they are going to execute, it will be very challenging for private investors to calculate their return on investment.

Another very important consideration is that the public sector needs to understand that the private investors are there not to support just the country's technology, but actually support what is good for the entire partnership. I have seen examples where private investors come in and talk about airport development, wanting to bring in technology that was developed in their countries 30 years ago. Specifically, the analog technology is a very useful and well-proven one, yet it is certainly not what you would want to put into your airport for the next 25 years. The private investors need to be thinking about the business case, yet they should not constrain the relationship based on specific technology.

Finally, the efficiency of all three – airspace, airport, aircraft – must be maximised. If any point of that "triangle" is inefficient or not modernised, that is going to be a constraint point. The Boeing 787 and Airbus A350 aircraft that Vietnam Airlines is putting in are equipped for the future, being able to save 20-25 per cent on fuel and carbon emissions. But you have to consider airport and airspace, too.

At the Southeast Asia Airport Expansion Summit in Ha Noi last September, an official from the Viet Nam Air Traffic Management Corporation said: "Don't think about expansion on the ground if there isn't enough space for aircraft in the sky." He meant that the ability to control air traffic must keep abreast with airport development. How do you assess Viet Nam's air traffic management capacity in relation to the growth of its aviation infrastructure?

Aerospace today uses analog-based technology to allow aircraft to fly safely, and also uses satellite-based technology with performance-based navigation to create "electronic highways" in the sky, which are very efficient for the aircraft to fly.

Typically, if you are not flying in performance-based navigation, the air traffic controllers on the ground will give the airplane radar vectors and altitude and speed constraints. Imagine you are trying to control automobiles on a highway by telling every single car to slow down or pick up to a speed, or change lanes to a point, you are going to have a very congested highway. But with the performance-based navigation, the aircraft are automated and the air traffic controllers know exactly where each airplane is at each speed and time. Then all the back and forth communication is not really required and everything is going to flow very smoothly. This can help increase the capacity of airports with no changes required to the amount of runways and the size of the airports.

A good point I have mentioned is that Viet Nam has Boeing 787 and Airbus A350. Actually, all commercial aircraft in the country, such as Boeing 737 and Airbus A320, have the capability to fly with the global positioning system. So the aircraft are not the issues. It is a matter of making sure that the airspace is modernised.

The ACV is the largest enterprise in the country's transport sector, managing 22 airports nation-wide. It plans to offer strategic investors a stake of 20 per cent, after launching an initial public offering on December 10. Is Honeywell considering buying in?

That is not our actual investment sector. We are closer to the public-private partnership from an airport and airspace technology standpoint. — VNS