1. VIETNAM CIVIL AVIATION PRESENT AND FUTURE PRESENTED BY SR. DEPUTY DIRECTOR GENERAL OF THE CIVIL AVIATION ADMINISTRATION OF VIET NAM – MR. LUU THANH BINH Hong Kong, September 2007

2. THE COUNTRY OF VIETNAM Location: Southeast Asia Location: Southeast Asia Total area: 331,041 km2 Total area: 331,041 km2 Population: about 85 million (2007) Population: about 85 million (2007) Major centres: Ha Noi Capital, Da Nang and Ho Chi Minh City Major centres: Ha Noi Capital, Da Nang and Ho Chi Minh City

3. Transport systems Comprehensive transport network with all modes of transport: roads (more than 77,300 km), railways (3,150 km), waterways (41,000 km), coastal lines (3.200 km) with 92 ports and a system of 61 airport being planned of which 20 are serving civil aviation operations. Comprehensive transport network with all modes of transport: roads (more than 77,300 km), railways (3,150 km), waterways (41,000 km), coastal lines (3.200 km) with 92 ports and a system of 61 airport being planned of which 20 are serving civil aviation operations.

4. History of civil aviation Established on January 15, 1956 under the Prime Minister (belonging to the Ministry of National Defence). Established on January 15, 1956 under the Prime Minister (belonging to the Ministry of National Defence). General Civil Aviation Administration of Viet Nam established in 1976 under the Council of Ministers (belonging to the Ministry of National Defence). General Civil Aviation Administration of Viet Nam established in 1976 under the Council of Ministers (belonging to the Ministry of National Defence). During 1989-1995: State regulatory functions being separated from the business operation. During 1989-1995: State regulatory functions being separated from the business operation.

5. History of civil aviation (cont ’ d) June 1992: the Civil Aviation Administration of Viet Nam (CAAV) established under the Ministry of Transport and Communications. June 1992: the Civil Aviation Administration of Viet Nam (CAAV) established under the Ministry of Transport and Communications. May 1995: the CAAV transferred to be under the PM’s Office and Vietnam Airlines Corp. established. May 1995: the CAAV transferred to be under the PM’s Office and Vietnam Airlines Corp. established. August 2003: the CAAV back again to be under the Ministry of Transport. August 2003: the CAAV back again to be under the Ministry of Transport.

6. ORGANIZATION STRUCTURE MINISTRY OF TRANSPORT CAA OF VIETNAM NORTHERN AIRPORTS AUTHORITY SOUTHERN AIRPORTS AUTHORITY VIETNAM AIR TRAFFIC MANAGEMENT MIDDLE AIRPORTS AUTHORITY AVIATION MEDICAL CENTER AVIATION MAGAZINE

7. Law on civil aviation Enacted by the National Assembly on June 29, 2006 has become effective since January 1st 2007 and replaced the 1991 Law on Civil Aviation. Enacted by the National Assembly on June 29, 2006 has become effective since January 1st 2007 and replaced the 1991 Law on Civil Aviation. The 2006 Law - An important legal instrument which regulates all civil aviation activities in general and the air transport in particular. The 2006 Law - An important legal instrument which regulates all civil aviation activities in general and the air transport in particular.

8. Law on civil aviation (cont’d) Compared to the 1991 Law, the 2006 Law on Civil Aviation contained major changes in the direction that the air transport operation will be regulated in the manner that ensure fair and equal participation of all economic sectors, healthy competition in the air transport business; ensure the role of the air transport industry in the socio-economic development of the country while protecting the legitimate rights and interests of the consumers, enhancing the quality of the air transport and other auxiliary services. Compared to the 1991 Law, the 2006 Law on Civil Aviation contained major changes in the direction that the air transport operation will be regulated in the manner that ensure fair and equal participation of all economic sectors, healthy competition in the air transport business; ensure the role of the air transport industry in the socio-economic development of the country while protecting the legitimate rights and interests of the consumers, enhancing the quality of the air transport and other auxiliary services.

9. System of Air Services Agreements Signed air transport agreements with 57 countries and territories; Signed air transport agreements with 57 countries and territories; 1 multilateral air services agreement with Cambodia, Laos and Myanmar (CLMV Multilateral Air Services Agreement). 1 multilateral air services agreement with Cambodia, Laos and Myanmar (CLMV Multilateral Air Services Agreement).

10. System of Air Services Agreements (cont’d) Recent new or amended agreements (with Kuwait, Oman, USA, UAE, New Zealand, Canada, Iran, Malaysia, Qatar, Singapore, Japan, Korea, Austria, Thai land, Australia, Russian Federation etc.) reflect different levels of air transport liberalization to facilitate the operation to/from Viet Nam by both Vietnamese and foreign airlines. Recent new or amended agreements (with Kuwait, Oman, USA, UAE, New Zealand, Canada, Iran, Malaysia, Qatar, Singapore, Japan, Korea, Austria, Thai land, Australia, Russian Federation etc.) reflect different levels of air transport liberalization to facilitate the operation to/from Viet Nam by both Vietnamese and foreign airlines.

11. Cooperations In ASEAN: signed the 2002 Memorandum of Understanding (MOU) on Air Freight Services. In ASEAN: signed the 2002 Memorandum of Understanding (MOU) on Air Freight Services. Developing the ASEAN Multilateral Agreement on Air Services and the ASEAN Multilateral on the Full Liberalization of Air Freight Services. Developing the ASEAN Multilateral Agreement on Air Services and the ASEAN Multilateral on the Full Liberalization of Air Freight Services. Establishing of the ASEAN Single Aviation Market by the year 2015. Establishing of the ASEAN Single Aviation Market by the year 2015.

12. Cooperations (cont’d) In APEC: offered voluntary commitments in air transport services in line with general requirements of the member economies and has been actively implementing the eight options in air transport liberalization which was adopted by APEC transport ministers in 1995 and the liberalization road map in the Viet Nam’s Individual Action Plan (IAP) towards Bogor Goals i.e. full liberalization by the year 2010 and 2010 for developed and developing economies respectively. In APEC: offered voluntary commitments in air transport services in line with general requirements of the member economies and has been actively implementing the eight options in air transport liberalization which was adopted by APEC transport ministers in 1995 and the liberalization road map in the Viet Nam’s Individual Action Plan (IAP) towards Bogor Goals i.e. full liberalization by the year 2010 and 2010 for developed and developing economies respectively.

13. Cooperations (cont’d) In WTO: offered market access as required by the GATS on aircraft repair, sale and marketing, computer reservation systems (CRSs) and joined the Agreement on the Civil Aviation Aircraft Purchase and negotiated to expand the market access as required by the Doha Round. In WTO: offered market access as required by the GATS on aircraft repair, sale and marketing, computer reservation systems (CRSs) and joined the Agreement on the Civil Aviation Aircraft Purchase and negotiated to expand the market access as required by the Doha Round.

14. Vietnamese Airlines Vietnam Airlines (the flag carrier) established in 1993; Vietnam Airlines (the flag carrier) established in 1993; Pacific Airlines - share-holding company established in 1995; Pacific Airlines - share-holding company established in 1995; Vietnam Air Services Company (VASCO) established in 1995; and Vietnam Air Services Company (VASCO) established in 1995; and Service Flight Corporation (SFC) established in 1988. Service Flight Corporation (SFC) established in 1988.

15. Vietnamese Airlines (Cont’d) Vietnam Airlines accounts for the major share of the traffic carried (87% domestic traffic and 92% international traffic). Vietnam Airlines accounts for the major share of the traffic carried (87% domestic traffic and 92% international traffic). Pacific Airlines, due to its small scope of business, only operates to some markets. Pacific Airlines, due to its small scope of business, only operates to some markets. VASCO operates flights serving some of the technical and economic branches such as forestry, aerial photography, charter services, freight services, express parcel services and it is now expanding its services to scheduled operation on short haul routes in the country. VASCO operates flights serving some of the technical and economic branches such as forestry, aerial photography, charter services, freight services, express parcel services and it is now expanding its services to scheduled operation on short haul routes in the country. SFC focuses on services to oil exploration companies. In addition this carrier is also providing other specialized services by helicopters for the search of MIAs, VIP flights etc. SFC focuses on services to oil exploration companies. In addition this carrier is also providing other specialized services by helicopters for the search of MIAs, VIP flights etc.

16. Operation of Vietnamese Airlines North-South routes are being operated by Vietnam Airlines and Pacific Airlines North-South routes are being operated by Vietnam Airlines and Pacific Airlines Other domestic routes are only operated by Vietnam Airlines – Since second half of 2004, VASCO has been involved in transported from HCMC to Ca Mau and Con Dao Island Other domestic routes are only operated by Vietnam Airlines – Since second half of 2004, VASCO has been involved in transported from HCMC to Ca Mau and Con Dao Island International flights mainly depart from Hanoi and HCMC International flights mainly depart from Hanoi and HCMC

17. Operation of Vietnamese Airlines (cont’d) Vietnam Airlines is the major operator, covering 24 routes nation wide, 37 direct international routes and 3 code-shared to 27 cities over the world. Vietnam Airlines is the major operator, covering 24 routes nation wide, 37 direct international routes and 3 code-shared to 27 cities over the world. Pacific Airlines has 2 domestic routes from Ha Noi to HCMC and Da Nang; 3 international routes to Hong Kong, Taiwan and Kaohsiung. Pacific Airlines has 2 domestic routes from Ha Noi to HCMC and Da Nang; 3 international routes to Hong Kong, Taiwan and Kaohsiung.

18. Operation of Vietnamese Airlines (cont’d) Capacity Capacity Source: CAAV-2006

19. Market shares in 2004 Passenger traffic volume Annual growth rate: - VNA: 9,2% - BL: 14,5% - Total market: 10,2%

20. Market shares in 2004 Cargo volume (tons) Annual growth rate: - VNA: 11.6% - BL: 20.3% - Total market: 14.6%

21. Air Transport Before 1989, there were only few flights to Laos, Cambodia, China and then Thailand. During that time the Viet Nam civil aviation industry was gradually expanding its international cooperation mainly on bilateral basis, preparing legal and technical foundation for further, more active and effective integration in the international aviation community starting for the 1990s when the Viet Nam civil aviation became an independent economic and technical branch. Before 1989, there were only few flights to Laos, Cambodia, China and then Thailand. During that time the Viet Nam civil aviation industry was gradually expanding its international cooperation mainly on bilateral basis, preparing legal and technical foundation for further, more active and effective integration in the international aviation community starting for the 1990s when the Viet Nam civil aviation became an independent economic and technical branch.

22. Air Transport (cont’d) During 1990-1994: the growth rate was rather high, accounting for 20-45% per year due to the low starting point. This period marked an important milestone for the new phase of development of the civil aviation industry of Viet Nam - development and integration into the international aviation community. During 1990-1994: the growth rate was rather high, accounting for 20-45% per year due to the low starting point. This period marked an important milestone for the new phase of development of the civil aviation industry of Viet Nam - development and integration into the international aviation community.

23. Air Transport (cont’d) During 1995 to 2005: high growth rate, totaling 62.54 million passengers (annual growth rate of nearly 11%), 1.36 million tons of cargo (annual growth rate of nearly 13.4%). During 1995 to 2005: high growth rate, totaling 62.54 million passengers (annual growth rate of nearly 11%), 1.36 million tons of cargo (annual growth rate of nearly 13.4%). Expanding route networks operated by the two Vietnamese carriers and 40 foreign airlines from 20 countries and territories connecting Viet Nam with 27 cities in Asia, Europe, America and Australia. Expanding route networks operated by the two Vietnamese carriers and 40 foreign airlines from 20 countries and territories connecting Viet Nam with 27 cities in Asia, Europe, America and Australia.

24. Air Transport (cont’d) The last 4 years: the air transport market of Viet Nam has been developing firmly. The last 4 years: the air transport market of Viet Nam has been developing firmly. New airlines operate new routes to Viet Nam: New airlines operate new routes to Viet Nam: –United Airlines, Air China, Qatar Airways, Jetstar Airways, Royal Brunei Airlines, Vladivostok Avia... –other secondary airlines: Mandarin Airlines, Bangkok Airways, Shenzhen Airlines, Hongkong Airlines and other low-cost carriers in Southeast Asia such as Thai AirAsia, Air Asia, Jetstar Asia, Tiger Airways... –international air freight market has also had big steps forward with new cargo carriers such as Transmile, FedEx, Shanghai Airlines Cargo (to HCMC), China Airlines and Eastern Air Transport (to Noi Bai)...

25. Traffic growth forecast YEAR 2006- 2010 2010- 2015 2015- 2020 Passenger 13 - 14% 9 - 10% 8 - 9% Cargo 14 - 15% 10 - 11% 15 - 16% Air traffic control 7 - 8% 6 - 7%

26. AIRPORTS 22 airports throughout the three regions of the country 22 airports throughout the three regions of the country - 3 International airports in each region - 19 domestic airports

27. AIRPORTS  6 airports in the North – Noi Bai International airport (Hanoi) – Dien Bien – Na San (Son La)-closed for upgrade – Cat Bi (Hai Phong) – Vinh – Dong Hoi – under construction   Hai Phong 

28. AIRPORTS 8 airports in the Centre – Phu Bai (Hue) – Da Nang International airport – Chu Lai (Quang Nam) – Pleiku – Phu Cat (Quy Nhon) – Tuy Hoa – Cam Ranh – Nha Trang (closed temporarily)  

29. AIRPORTS 9 airports in the South 9 airports in the South – Buon Me Thuot – Lien Khuong (Da Lat) – Tan Son Nhat International airport (HCMC) – Vung Tau – Can Tho (not in operation) – Rach Gia – Phu Quoc – Ca Mau – Con Son (Con Dao)      

30. Domestic airports network The domestic airport network of Viet Nam has been structured as “spokes and hubs” with routes to/from localities from major cities of Ha Noi, Da Nang and Ho Chi Minh City. There are now 24 routes to 18 cities and provincial towns throughout the countries operated by Vietnam Airlines, Pacific Airlines and VASCO. The domestic airport network of Viet Nam has been structured as “spokes and hubs” with routes to/from localities from major cities of Ha Noi, Da Nang and Ho Chi Minh City. There are now 24 routes to 18 cities and provincial towns throughout the countries operated by Vietnam Airlines, Pacific Airlines and VASCO.

31. Traffic growth at airports During 1995-2006, the traffic growth at airports reached an average annual increase of 11.4%, 13,7% and 6,9% in terms of passengers, cargo and traffic movements respectively. During 1995-2006, the traffic growth at airports reached an average annual increase of 11.4%, 13,7% and 6,9% in terms of passengers, cargo and traffic movements respectively.

32. Traffic growth at airports (cont’d) In 2006, the total throughput passenger traffic at airports of Viet Nam reached more than 16.6 million, 85% of which were at 3 international airports. The break-down passenger traffic at each of the airports is as follows: In 2006, the total throughput passenger traffic at airports of Viet Nam reached more than 16.6 million, 85% of which were at 3 international airports. The break-down passenger traffic at each of the airports is as follows: –Northern airports: 5.4 million, accounting for 32.2%; –Central airports: 2.2 million, accounting for 13.3%; –Southern airports: 9 million, accounting for 54.6%.

33. Airport Traffic Sources: CAAV - 2005

34. Airport Traffic (cont’d) Passengers Passengers Source: CAAV - Data for 2005 – Unit: hundreds

35. AIRPORTS Cargo and mails Cargo and mails Data for 2005 – Unit: Tons

36. AIRPORTS DEVELOPMENT Objectives: Objectives: –to enhance capacity and operational capability of the whole airport network by 2.5 times by the year 2015 and by approximately 4 times by the year 2020. A comprehensive airport network will be completed by the year 2020 with anticipated scope, capability and quality that can serve as passenger and cargo hubs of international standard and can compete with other major regional hubs.

37. Airports Development (cont’d) –to maximize revenues by diversifying services at airports and rationalizing franchise contracts; to improve service quality at the airports by preventing monopoly and anti- competitive practices and by corporatizing some of the services that are justified. –to commercialize services at airports, facilitating competitive provision of non- aviation services; increase the proportion of non-aviation revenue (targeted for more than 50%) with involvement of private sectors in this area.

38. Airports Development (cont’d) Development plan in the North Noi Bai Airport Noi Bai Airport - New terminal (T2) planned after 2010 with capacity of 15 millions passengers/year - Terminal 3 project and one more runway 3800 x 60m with expected capacity of 30- 50 million passengers/year after 2020 are under consideration

39. Development plan in the North (cont’d) Cat Bi Airport Cat Bi Airport - To be upgraded into an international airport with a runway 3000m x 45m, terminal capacity of 2 million passengers/year. - Planned to start construction in 2007 and to be completed by 2010

40. Development plan in the North (cont’d) Na San Airport Na San Airport - The airport is temporarily closed for upgrade - The new runaway of 3000m x 45m be able to receive airplane A320 with new terminal capacity of 500,000 passengers/year

41. Development plan in the North (cont’d) Dong Hoi Airport Dong Hoi Airport - Newly constructed with a runway of 2700x40m. - Terminal capacity is 300,000 passengers/year; operational in 2 nd quarter 2007. Quang Ninh, Lao Cai, Gia Lam airports Quang Ninh, Lao Cai, Gia Lam airports (are being studied)

42. Airports Development (cont’d) Development plan in the Centre Da Nang Airport Da Nang Airport - The new terminal is being designed to accommodate 4 million passengers/year, total space is 34,000m2 - Planned to start construction by the end of 2007 – complete by 2010

43. Development plan in the Centre (cont’d) Cam Ranh Cam Ranh New terminal is planned to be constructed in2007 with capacity of 1 – 2 million passengers/year and completed by 2009 Chu Lai Chu Lai - Aimed to become an international airport and cargo hub with capacity of 4.5m tons/year - A runway 4000x60m, able to receive aircraft B747, A380

44. Airports Development (cont’d) Development plan in the South Tan Son Nhat Airport - A new terminal for 8 million passengers is being constructed. - Expected to be operational end of 2007

45. Development plan in the South (cont’d) Long Thanh – –A master plan to build this new airport is being prepared – –Located in a large area of 5,000 ha in Dong Nai province, 30 Km South West HCMC. – –planned to replace Tan Son Nhat International airport in the future – –formerly used as a US Army airfield. – –planned to be built at 4F grade with 4 runways, able to accommodate A380 aircrafts or similar, 20 million passengers capacity

46. Development plan in the South (cont’d) Long Thanh - - Targeting 2010 – 2020 as the possible period for project implementation - - Handling 10m tonnes of air cargo - - 6 US$ bil. is intended to invest in four main areas: The runway system, terminals, access roads and maintenance facilities

47. Development plan in the South (cont’d) Lien Khuong Lien Khuong New terminal – 1 million passengers/year is to be built in the period 2007-1020 Phu Quoc Phu Quoc - The new airport will be built at Duong To area, 600 ha, accommodate aircrafts A321, B767. - Terminal for 2 million passengers/year - Planned to construct in 2008

48. Development plan in the South (cont’d) Can Tho Can Tho - The runway is being upgraded into 3000x45m - New terminal for 2 million passengers/year - Aimed to come into operation in 2009

49. Required investments to 2015 Total investment capital required for airport infrastructure: 45,000 VND billion (equivalent to 2.84 US$ billion), of which: Total investment capital required for airport infrastructure: 45,000 VND billion (equivalent to 2.84 US$ billion), of which: –Up to 2010: 16,400 VND billion (equivalent to 1.03 US$ billion); –Up to 2015: 29,000 VND billion (equivalent to 1.81 US$ billion)

50. Investment Structure State budget (airport infrastructure and training facilities): 5,300 VND billion (in case capital can be mobilized for the two projects of Lao Cai and Quang Ninh, the State budget will be reduced to 3,800 VND billion). State budget (airport infrastructure and training facilities): 5,300 VND billion (in case capital can be mobilized for the two projects of Lao Cai and Quang Ninh, the State budget will be reduced to 3,800 VND billion).

51. Investment Structure (cont’d) ODA funds loaned to enterprises (Terminal 2, pilot training): 5,300 VND billion. ODA funds loaned to enterprises (Terminal 2, pilot training): 5,300 VND billion. Capital invested by enterprises (including those incurred from corporatization): 19,200 VND billion. Capital invested by enterprises (including those incurred from corporatization): 19,200 VND billion. Capital from joint ventures, BOT, BOO, PPP: 14,200 VND billion. Capital from joint ventures, BOT, BOO, PPP: 14,200 VND billion.

52. Required investments 2016-2020 Total investment capital required for airport infrastructure:43,700 VND billion (equivalent to 2.73 US$ billion) Total investment capital required for airport infrastructure:43,700 VND billion (equivalent to 2.73 US$ billion)

53. Actions taken Priority will be given to the development of international airports, especially those play a vital role and serve as passenger and cargo hubs such as Noi Bai, Tan Son Nhat, Long Thanh, Chu Lai in order to put these centres on an equal footing with other aviation centres in the region. Priority will be given to the development of international airports, especially those play a vital role and serve as passenger and cargo hubs such as Noi Bai, Tan Son Nhat, Long Thanh, Chu Lai in order to put these centres on an equal footing with other aviation centres in the region.

54. Actions taken (cont’d) From 2007 on priority is only given to investment from the State budget, government bond, ODA loan allocated by the government for essential infrastructures at the airports (runways, taxiways, aprons, access roads). From 2007 on priority is only given to investment from the State budget, government bond, ODA loan allocated by the government for essential infrastructures at the airports (runways, taxiways, aprons, access roads). With respect to other technical facilities, investment will be taken from financial sources like the enterprises’ own funding, ODA funds (wholly returned by the enterprises themselves), capitals taken from joint ventures, pools with domestic or foreign partners under different forms of investments such as BT, BOT, BOO, PPP... With respect to other technical facilities, investment will be taken from financial sources like the enterprises’ own funding, ODA funds (wholly returned by the enterprises themselves), capitals taken from joint ventures, pools with domestic or foreign partners under different forms of investments such as BT, BOT, BOO, PPP...

55. Actions taken (cont’d) In 2007 a proposal be submitted to the Government for preferential measures and policies to attract more investment to speed up the projects of Noi Bai, Chu Lai and Long Thanh. In 2007 a proposal be submitted to the Government for preferential measures and policies to attract more investment to speed up the projects of Noi Bai, Chu Lai and Long Thanh. In 2008 a proposal be submitted to the Government to establish a State centralized fund for the maintenance and investment of infrastructures at airports mobilizing a part of the annual State budget contribution by enterprises under the CAAV, charges collected from direct users of air transport infrastructure through air fares, passenger service charge, fuel surcharge etc. In 2008 a proposal be submitted to the Government to establish a State centralized fund for the maintenance and investment of infrastructures at airports mobilizing a part of the annual State budget contribution by enterprises under the CAAV, charges collected from direct users of air transport infrastructure through air fares, passenger service charge, fuel surcharge etc.

56. Actions taken (cont’d) ODA funding will be used up for major projects at airports which require large amount of capital (Noi Bai International Airport Terminal 2, Long Thanh) and training programmes for pilots. ODA funding will be used up for major projects at airports which require large amount of capital (Noi Bai International Airport Terminal 2, Long Thanh) and training programmes for pilots. FDI is encouraged in the forms of BT, BOT, BOO, PPP... for the development of airports of Chu Lai, Long Thanh, new airports, aviation engineering industry (aircraft maintenance and repair, production spare parts and components...), and other airport technical and commercial facilities. FDI is encouraged in the forms of BT, BOT, BOO, PPP... for the development of airports of Chu Lai, Long Thanh, new airports, aviation engineering industry (aircraft maintenance and repair, production spare parts and components...), and other airport technical and commercial facilities.

57. THANK YOU FOR YOUR ATTENTION !