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Conference hears of private investment in airports

Released at: 19:53, 03/06/2015

Conference hears of private investment in airports

Airlines and private investors would be good for airports but certain risks would come into play, CIEM conference told.

by Minh Tuyet

An airline should be permitted to own an airport and foreign investors should be able to hold a 49 per cent share in an airport, Dr. Warren Mundy from the Australian Productivity Commission told a conference on private investment in airport, harbor and energy services hosted by the Central Institute for Economic Management (CIEM) on June 3 in Hanoi.

Dr. Mundy emphasized that private investment would ease the burden on State investment at a time when it is necessary to invest in transport, energy, and telecommunications. Moreover, he added, management capacity would improve with the involvement of the private sector.

While private investment is a positive move it could, however, result in a monopoly. Investors, he pointed out, could set a high price for airport services after a making such a huge investment. Airlines should therefore not hold a majority share in an airport and regulation by the government is necessary.

He suggested that airport service fees be subject to a price ceiling, which can only be adjusted after five years and when new investment has been made in the airport. The government would play an important role in supervising requests to adjust service prices.

Mr. Tran Dinh Cung, Director of CIEM, expressed his concern at the conference over whether the State should be able to intervene in the development plans of airport investors. It was also possible, he went on, that investors may collude with each other to push up airport service prices.

In response to Mr. Cung, Dr. Mundy said that the State must supervise the investors’ operations and every five years the investors should analyze their price structure and submit this to the State.

He also believes that airlines should not be encouraged to build their own private airports as this would be a waste of investment resources and create chaos in aviation management. Lastly, if there was war or a natural disaster the State should have the right to repurchase all airports or seek suitable support from investors, he said.

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