August 27, 2014: The International Air Transport Association (IATA) called on the Vietnamese government to work with the air transport sector to strengthen the country's economy through global air connectivity.
"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," said Tony Tyler, IATA's Director General and CEO in his keynote address at the Vietnam Aviation Day organized by IATA and Vietnam Airlines. Aviation contributes $6 billion to Vietnam's GDP and supports over 230,000 jobs. Between 2008 and 2013, Vietnam's passenger traffic grew by 96%.
While air freight accounts for a very small amount of Vietnam's trade by volume, it represents 25% of Vietnam's trade by value, or $29 billion. E-freight will help to improve the efficiency of Vietnam's air cargo industry.
"A key step to implementing e-freight is the adoption of the e-Air Waybill (e-AWB). While Vietnam Airlines has been able to use e-AWB for domestic freight, it is unable to do so internationally as Vietnam has yet to ratify the Montreal Convention 99 (MC99). I urge Vietnam to ratify MC99 quickly so that greater efficiencies can be achieved in Vietnam's air cargo sector," said Tyler. MC99 provides the legal framework for the use of electronic document of carriage, paving the way for freight forwarders and airlines to use the e-AWB.
Infrastructure is a critical component of the air transport sector which needs improvement. Vietnam ranks 82nd in the Infrastructure Index of the World Economic Forum's Global Competitiveness Report. Among the ten ASEAN states, Vietnam is ranked sixth. Vietnam is addressing these low rankings with significant investments. It has announced 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.
While encouraged by the positive steps taken to improve Vietnam's infrastructure, IATA urged careful planning and industry consultation leading to a well-thought-out regulatory structure in advance of any change to the current 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. The most common being unjustified increases in charges or under-investment in the CAPEX plan as the private operator tries to squeeze out profit," said Tyler.
"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 (ICAO) 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.