Worldbox: The rush to build more airports in Southeast Asia

Southeast Asian countries are embarking on a significant airport building and expansion spree to boost tourism and trade flows. The construction projects should also create investment opportunities, as well as sales potential for suppliers of high-tech equipment from outside the region, writes Adrian Ashurst, CEO of Worldbox Intelligence.

Vietnam is leading the way, with plans to build 30 airports, while six other countries – Thailand, Malaysia, Singapore, Cambodia, Indonesia and the Philippines – are either planning new airports or expanding existing ones. The investment should result in a significant expansion in passenger and cargo capacity in the region. That growth is much needed, given that total air passenger travel in Southeast Asia is expected to reach 653 million people by 2030, nearly doubling from 2023.

Vietnam leads the charge

Vietnam’s aviation sector is struggling to match the demands of a rising economy, a growing middle class, and the country’s increasing appeal as a tourist destination. Hence, in June 2023, the authorities announced plans to increase the number of airports in the country to 30 from the current 23. Vietnam’s ambitions include a US$4 billion Hanoi airport expansion, a third terminal at Tan Son Nhat airport that services Ho Chi Minh City (HCMC) and an entirely new second airport for HCMC.

Most of Vietnam’s airports are currently operating at overcapacity, leading to long delays for passengers and cargo. Many also suffer from a lack of modern facilities such as terminals where passengers can directly board aircraft. Passengers are bussed to their aircraft even at Tan Son Nhat, by far the country’s busiest airport. Tan Son Nhat airport has been serving 36 million passengers a year since 2017, far exceeding its designed capacity of 25 million a year.

Meanwhile, the government is planning to invest more than US$4 billion to increase the capacity of Hanoi’s Noi Bai International Airport – Vietnam’s second-busiest airport – to 60 million passengers by 2030, approximately 2.5 times its current capacity.

Vietnam needs more than US$17 billion in investment for its airport expansion plans, and that will represent a huge opportunity for foreign investors as well as suppliers of advanced airport technology. France Aviation Civile Services (which already supplies air traffic control services to a number of airports in the country) and JCDecaux (which provides airport advertising) are among the foreign companies seeking to benefit.

Thailand aims to cement its position as the region’s leading tourist destination

Thailand remains the most popular tourist destination in Southeast Asia, with around 28 million arrivals in 2023. Yet even though that number remains well below the record 40 million arrivals seen in 2019, the country’s aviation infrastructure is struggling to cope – as anyone who has endured anxiety-inducing waits at Bangkok’s main international airport, Suvarnabhumi, can testify.

A new satellite terminal opened at Suvarnabhumi in September. It can handle up to 28 aircraft and 15 million passengers a year. Once fully operational, it will boost the airport’s overall capacity by 30%, to 60 million passengers annually, easing congestion. A new runway will also open in 2024, and there are plans to build a second satellite terminal and another runway by 2030, increasing annual passenger-handling capacity to 150 million. Suvarnabhumi’s expansion plans will involve a spend of around US$7 billion.

The government is also building a new terminal at Bangkok’s other airport, Don Mueang, which was supposed to close down when Suvarnabhumi opened in 2006. The government has approved plans for an “aviation city” surrounding U-Tapao airport, located near Pattaya, which could also serve Bangkok. It will be able to handle up to 60 million passengers annually. A high-speed railway would connect the airport to the capital’s existing airports. New airports are being planned for Thailand’s second-largest city of Chiang Mai, and on the island of Phuket, both of which already have airports.

Investment in Thailand’s airport expansion plans will run into the tens of billions of dollars. Companies that offer airport design and construction services, ground support equipment, security-screening equipment, and airfield lighting equipment could find opportunities from Thailand’s drive to expand its airport capacity.

Cambodia’s ambitions take flight

Neighbouring Cambodia, meanwhile, is building a new airport serving Phnom Penh. By December 2023, around 55% of the work involved in constructing Techo International Airport in Kandal and Takeo provinces, about 20 km south of Phnom Penh, had been completed. Costing around US$1.5 billion, the airport will initially handle 13 million passengers – a figure that will increase to 30 million passengers by 2030.

Last September, Siem Reap-Angkor International Airport, built over three years at a cost of about $1 billion, began operations. The new 700-hectare airport is around 40 kilometres from Siem Reap and was developed by a consortium of Chinese state-owned companies that are running the facility under a 55-year build-operate-transfer deal. Millions of tourists arrive in Siem Reap each year, mainly to visit the ruins of Angkor Wat, the vast Hindu-Buddhist temple complex that is Cambodia’s biggest tourism draw.

Cambodia’s new airports should help drive the rapid growth of tourism and help the country in its ambitions to become a regional manufacturing and business hub.

Malaysia expanding capacity

Malaysia, too, is planning new airports and the refurbishment of existing facilities. It aims to handle 150 million passengers at its airports by 2030, double the current capacity. Long queues at passport control and the frequent breakdowns of inter-terminal transport trains have prompted an upgrade of Kuala Lumpur International Airport. Work at the 25-year-old airport will include self-service baggage drop-offs, a redesign of the check-in counters, new inter-terminal transport links and baggage-handling systems, lounges and food-and-beverage outlets. The upgrade, which will increase capacity to 140 million passengers and 2.5 million tonnes of cargo per year, will begin in 2026.

Construction of a new airport at Kuantan is expected to commence in 2024. The airport will feature space for maintenance, repair and overhaul services, as well as other commercial and industrial elements, and is expected to boost economic ties with China. Expansion of Penang International Airport will also start in 2024, with the aim of increasing capacity from 6.5 million passengers per annum to 12 million.

The world’s best airport is getting bigger

Capacity at Singapore’s Changi Airport, long regarded as the world’s best, has increased following the opening of a refurbished and expanded Terminal 2 in November 2023. The airport is now able to handle 95 million passengers a year, up from 85 million previously. Plans for a fifth terminal were also revealed in 2023. Construction will begin around 2025, with the facility expected to open to travellers in the mid-2030s. It will feature a three-runway system and will be linked to the other four terminals.

The Philippines and Indonesia: building new airports serving capital cities

The Philippines is investing heavily in developing the New Manila International Airport, also known as Bulacan International Airport, which is under construction on the coastal area 35 km north of the capital, Manila. Reclamation of land for the project began in late 2023. The airport will be developed in phases, with an initial capacity of 35 million passengers annually, and a target of 100 million passengers per year once fully completed. The US$5 billion project will generate around 1 million new jobs, directly and indirectly, according to some reports. The government has plans to build new airports or refurbish existing facilities across the country to cope with an expected surge in demand from international and domestic passengers.

The Indonesian government of President Joko Widodo managed to construct 25 new airports and revitalise 38 existing ones in the period between 2015 and 2023. But the country aims to develop the aviation sector even further. The most expensive and ambitious project involves the construction of a new airport to serve the future capital city of Nusantara on the island of Borneo. The airport, which is located about 15 km (nine miles) from the city centre and covers more than 1700 acres, will be fully operational by the end of 2024.

All told, the airport expansion plans underway in Southeast Asia are among the most ambitious in the world. They hold the potential to transform local and national economies, generate millions of jobs and create huge opportunities for foreign suppliers and investors.

Source: Worldbox Press Release

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