The US$219.03 million aiport is the first of its kind to be constructed under the BOT (build-operate-transfer) model, Vietnamese Deputy Prime Minister Hoang Trung Hai said as he initiated the ground-breaking ceremony.

Phan Thiet will be a combined civil-military airport for domestic travel, with two separate developers in charge of each of the purposes.

The defense ministry-run 319 Corp. will build the military section under the BT (build-transfer) scheme, whereas Rang Dong Group will invest in the civil terminal under a BOT contract.

In the BOT framework, the developer receives a concession from the private or public sector to finance, design, construct and operate a facility for a certain period, during which it has to raise the finances for, and is entitled to retain all revenues generated by, the project. The facility will be then transferred to the public administration at the end of the concession agreement.

Meanwhile, under a BT contract, the contractor finances the project upfront and is then repaid over a short time frame.

Rang Dong Group chairman Nguyen Van Dong said his company will cover VND1.7 trillion ($79.22 million) of the total investment, while the BT portion is worth around VND3 trillion ($139.81 million).

The Phan Thiet airport is located on a 543-hectare land plot in Thien Nghiep Commune, with 150 hectares earmarked for defense purposes, and 109.5 hectares for civil aviation activities.

The civil and military terminals will share the remaining 283.5 hectares.

The airport is slated to be commissioned by 2018, and is expected to serve 500,000 passengers a year by 2020. Its capacity is projected to reach one million passengers a year in 2030.

The airport is expected to strongly boost Binh Thuan’s investment attraction and tourist arrivals.

Although the provincial tourism sector is still growing, there are signs that the growth is slowing and investors have become less interested, according to Nguyen Van Khoa, chairman of the Binh Thuan Tourism Association.

“With Phan Thiet set to be connected with air travel, the number of deluxe holidaymakers coming to Mui Ne will soar in the future,” Khoa was quoted by Dau Tu (Investment) newspaper as saying.

The rise in tourism arrivals will encourage investors to pump more money into new resort projects, he added.

The resort town of Mui Ne, known for its beautiful beaches and delicious seafood, is only 25km away from downtown Phan Thiet.

It now takes up to six hours to travel the 200km between Ho Chi Minh City and Phan Thiet, according to people who commute the route by bus.

Tourists can also choose to travel by train, which takes around four and a half hours, or a new seaplane service, tickets for which range from $175 to $250.

Phung Kim Vy, chairman of a Phan Thiet-based resort, said the airport is a “considerable complement to the development of the provincial tourism industry.”

Binh Thuan has many good tourism products and attractive destinations but tourists are discouraged as they have to travel a long way by road to reach the resorts and beaches there, Vy told Dau Tu.

“If Phan Thiet is connected with other big cities in and outside Vietnam, the number of holidaymakers will surely surge,” she said.