VietNamNet Bridge - The increasingly high number of airline passengers has allowed airport service providers to make stable profits.

 

The increasingly high number of airline passengers has allowed airport service providers to make stable profits.

Twenty-five million passengers had gone through HCM City’s Tan Son Nhat International Airport as of October 2015. The Civil Aviation Authority of Vietnam (CAAV) had predicted this figure would not occur until 2020.

It is expected that the number of passengers at Tan Son Nhat would increase by 5 million every year. The stable source of customers explains why investors want to obtain the right to provide airport services.

The profitability of airport services can be seen in the business performance of Sasco (Southern Airport Services Company) which operates more than 20 duty-free shops at Tan Son Nhat Airport.

A report released in mid-2015 showed that Sasco had high growth rates, 5.94 percent in 2012 and 10.98 percent in 2013, with revenue of VND1.809 trillion and VND2.013 trillion, respectively.

It is expected that the number of passengers at Tan Son Nhat would increase by 5 million every year. The stable source of customers explains why investors want to obtain the right to provide airport services.

In 2014, though there was less retail space because of terminal maintenance, Sasco still had satisfactory business result with revenue of VND2.044 trillion and post-tax profit of VND111.7 billion.
Sasco’s finance report showed that airport services at Tan Son Nhat brought 70-80 percent of the company’s revenue every year.

Sasco, therefore, drew special attention from the public when its stakes were put on the sale by ACV. 

IPP, the distributor for many luxury brands, which had held 16 percent of Sasco’s stakes by mid-2015, decided to buy the stakes to increase its ownership ratio in the air service company in a deal which believed to help IPP earn much more money.

According to IPP’s president Johnathan Hanh Nguyen, in the past, IPP only distributed products of some fashion brands at the airport. But now, as a big shareholder, IPP has brought more brands to duty-free shops and opened more fast food shops.

“There are about 12,000 products of high-end brands available at our duty-free shops,” he said.

However, the businessman said that providing air services required high investment.

It costs about $300,000 to set up a fast food shop in places outside the airport, while the costs are $500,000 to set up such a shop at the airport, since investors have to satisfy technical requirements. 

A businessman complained that the retail rent at Tan Son Nhat Airport is too high at $30-60 per square meter a month, which is nearly 50 percent higher than the market price. 

The electricity is also very expensive. Investors have to pay about VND70 million a month for the electricity bill for a retail area of some hundred of square meters.


Bizlive