Business and Business Environment in Vietnam Airline

Vietnam Airlines is the flag carrier in the aviation industry of Vietnam, operating 94 routes to domestic and international with more than 400 flights per day. Vietnam Airlines is the leading airline in the area with a modern, develop, and innovative flight team. Vietnam Airlines became a member of SkyTeam in 2010, a strategic alliance whose 19 participants have more than 14500 regular flights linked to the global network. >> Get more study resources on Vietnam Airlines 

Banking Academy Vietnam
International School of Business
Business and Business Environment
Name: Nguyen Ngoc Yen Linh
Class: F13B
Student ID: F14-418
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Table content
1. Introduction …………………………………………………………….. 6
2. PESTLE…………………………………………………………………. 6
3. SWOT……………………………………………………………………. 10
4. Interrelationship ………………………………………………………... 13
5. Reference………………………………………………………………… 14
Vietnam Airline
1. Introduction
Vietnam Airlines is the flag carrier in the aviation industry of Vietnam, operating 94 routes to
domestic and international with more than 400 flights per day. Vietnam Airlines is leading
airline in the area with the modern, develop and innovation flight team. Vietnam Airlines became
member of SkyTeam in 2010, a strategic alliance whose 19 participants have more than 14500
regular flights linked to the global network.
History
1993: Establish Vietnam national airlines
May 27,1995: Establish Vietnam Airline and 20 related enterprises.
2002: Introduce new logo – Golden Lotus attached the outstanding improvement in service
quality, expanding flight network and upgrading fleet
2006: Become a part of International Air Transport Association
June 10, 2010: Become the first member in South East Asia religion join in SkyTeam Alliance.
2015: The world's first airlines to fly the Boeing 787 and the Airbus A350 concurrently.
July 12, 2016: Vietnam Airlines first received a 4-Star certificate from Skytrax.
December, 2017: After 20 years of establishment and touching 1.5 million Golden Lotus
members, it invites 200 million travelers.
2018: Skytrax was accredited as a 4-star international carrier for the 3rd time in a row
(2016,2017,2018).
Vietnam Airlines was founded by the Government with 100% capital support. They depend on
Government policies and decision.
2. PESTLE
Political
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Stability of political
The stability of the political system is one of the most significant variables that has a big
influence on the development of the country's economy as well as on a company's corporate
strategy. This aspect is always taken into account when a company chooses to invest in business
expansion, especially in the construction of flight networks for air transport companies.
Example, because of the pollical tension increase, many airlines include Vietnam Airlines avoid
flying over Iran in 2020 (Vietnam Airlines, 2020). Vietnam Airlines stop flying over with high
risk in this religion after Iran’s military hit a UIA plane by a missile, kill all 176 people on broad
include: passengers and flight team.
Government spending
One of the firms under the government's management is Vietnam Airlines. The profit of Vietnam
Airlines due to the funding of government money, market security or special business support
policies when tough times occur, such as war, epidemics and fuel prices. Vietnam Airlines has
100% state capital by Government. Right now, airlines industry is in trouble with COVID-19,
Government have policies to helping Vietnam Airlines get out of trouble. Government accepted
Vietnam Airlines can sales the dividends of the airlines to survive in this time. Other,
Government choose Vietnam Airlines is the airway where helping citizen flight back to Vietnam
from other country. Vietnam Airlines borrowed from 4000 billion VND with 4% interest per
year from Government to avoid bankrupt (tuoitre, 2020).
Economic
Economic is one of the most important to run a business. Vietnam Airlines business activities are
based on the change of economic such as GDP growth rate, inflection rate, scarcity of resources,
the implement of government when join AFTA (ASIAN Free Trade Area), commitment when
join WTO,… It effects to the revenue, expenses, profit, losses of Vietnam Airlines.
GDP
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The percentage of GDP Vietnam increase from 2009-2019 (source: laodong.vn)
In 30 years after war, Vietnam from one of the poorest countries in the world become a
developing country with medium income. In this century, GDP of Vietnam increase more than
5% from 2009 to 2019, especially, in 2018 and 2019, in 2 consecutive years, GDP of Vietnam
grew over more 7%. Vietnam become one of the fastest of increasing GDP in South East Asia
area. Vietnam GDP in 2019 reached 2700 USD with the property rate fell sharply from 70% to
6%. The airlines industry is the most important with the change of GDP. If GDP increase 1%, the
rate of revenue of airlines industry will increase1.5-2%. In reality, the rate of revenue of airlines
in Vietnam increase 14-15% in 2019 and GDP of Vietnam is 7.02%. From January to November
of 2019, international passenger visited Vietnam are more than 16.3 million passengers, increase
15.4 % in 2018 (Tong Cuc Thong Ke, 2019). Vietnam Airlines is 35% of total flight in domestic
in 2019 (Tong Cuc Thong Ke, 2019).
However, despite being hit by the Asian financial and monetary crisis in 1997, the SARS
outbreak in 2002, the avian flu between 2004 to 2006, the Vietnamese economy in recent years,
the oil industry crisis has caused make the fuel prices jump up from 2004 until now, COVID-19,
but Vietnam Airlines still continue expanding and has a significant growth rate related to the
domestic transport industry. Obviously, the grew rate in domestic as well as the percentage of
foreign investment jump up the quantity of goods exchanged and sold in the market as the social
economy grows, which means the demand for transport will rise.
Social
Special meals during on the boarding time
Vietnam Airlines have different set of eating with special guest on the boarding such as:
vegetarian meals, children meals, religious meals medical meals and other specials meals. This
policy is respect religion of each passengers (Vietnam airlines, 2020). Passenger can note the
specials meals when they buy the ticket and Vietnam Airlines will prepare the right meals with
passenger choice. This policy makes passenger feel happy from Vietnam Airlines service.
Ticket prices change by passenger’s age
Vietnam Airlines has promotion for children from 0-12 years old, kids under 2 years old pay
10% flight ticket fee of adult ticket fee and for kid from 2 years old to 12 years old needs pay
90% adult ticket fee in domestic, 75% adult ticket fee in international. With kids are under than 2
years old, Vietnam Airlines have free meals needs booked before 24 hours in advance at the start
the flight, in-flight stroller and stroller service. For kids from 2 to 12 years old, the ticket include
free meals needs booked before 24 hours at the start of the flight. Also, people who older than 60
years old will have promotion to 65% of the ticket price (Vietnam Airline, 2020)
Technology
The speed of introduction of new technology and emerging technologies is a characteristic of the
aviation industry, since this is a special type of business involving a high degree of
organizational safety where loss occurs and causes injury. The consequences are catastrophic and
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virtually permanent for the damaged portion of the property. The fleet of Vietnam Airlines is still
being converted to modern aviation technologies, mainly using modern technological from well-
known aircraft manufacturers such as Airbus, Boeing, etc. Control systems to improve the
aircraft's operational efficiency and range, in conjunction with improving the structure of the
aircraft and the engine and fuselage. In science and technology, new generations of aircraft have
been built with specifications that best meet civil aviation travel requirements, such as longer
operating frequencies, higher engine thrust, higher aircraft capacity, lower noise, more fuel
savings, etc. This is the generation of aircraft such as: Boeing 777, Boeing 767, Airbus A320,
A321, ... Vietnam Airlines are developing. This is one of the main factors that determine the
quality, economic efficiency and comparative advantage of air transport products.
Legal
In order to develop, more transparently and in line with the integration pattern, the Vietnamese
legal structure has been gradually changed to join ASEAN, APEC, WTO, .., in particular the
Law on aviation safety and security (2006) participating in Vietnamese sector. This will restrict
the government's defines of Vietnam Airlines in Vietnam, but it is an incentive for Vietnam
Airlines to reaffirm its position against rivals in the air transport market. Also, a warning for the
number of traveller and international consumers will visit and discover the investment market,
the opportunities of invest will rise in the following year and the amount of goods traded will
grow in the market.
Environment
Geographic
With the location on the outskirts of Southeast Asia, between the international air flights from
East to West, from North to South, Vietnam's geographical position very desirable for the growth
of the industry of aviation, ideal for the creation of a short-haul flight network between the USA
and Australia, in the Southeast Asia and domestic flight inland. Vietnam Airlines' flight network
has developed high operating frequency, powerful transit services in Hanoi and Ho Chi Minh
City, providing international and Southeast Asian freight flows with a competitive edge,
eventually taking Vietnam to the regional air transit centre, directly competing with major hubs
such as Hong Kong, Bangkok, Singapore
Polluted
Around 7 million people die prematurely from air pollution worldwide each year, according to a
United Nations report, of which nearly 4 million people in the Asia-Pacific region. Air pollution
affects human health and economic growth with about 92% of people worldwide not breathing
clean air, costing the global economy $ 5 trillion a year. Thus, at the same time, Vietnam
Airlines is successfully applying several solutions to reduce environmental pollution. Since
2015, the first new-generation aircraft, including the A350, B787 and A321neo, have been
delivered to VNA. All the engines chosen on this latest aircraft comply with the emission
requirements of CAEP 6, minimizing fuel consumption by 16%, pollution by 50 percent and
noise by 75 percent relative to current engines. In addition to technological solutions such as
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engine maintenance, engine repair and design options to minimize fuel consumption, 43 fuel-
saving solutions have been maintained and implemented by VNA in operational operations.
Cascade. As of 2019, to promote the carbon offsetting and mitigation policy for foreign flights,
VNA has submitted pollution data to the Civil Aviation Authority of Vietnam.
Positive and negative factor to Vietnam Airlines
 Because Vietnam Airline is under the Government management, environment, legal and
technology are the positive factors to Vietnam Airlines. Government create aviation legal
based on Vietnam airlines barriers to recues Vietnam Airlines out of bankrupt. Location
of Vietnam is an advantage for the airlines industry. Vietnam Airlines always update the
newest of plane and technology for the demand of customers.
 Social, political and economic is negative factor because social is impact directly for the
reputation. Vietnam Airlines always have high quality service make customers satisfy.
Economic decline will affect to the revenue of Vietnam Airline decrease. Political tension
increase. The flight from Vietnam and to Vietnam by Vietnam Airlines will stop and the
percentage of increasing profit will decrease.
3. SWOT
Strength Weakness
- Government investment and support
of exploit flight path
- Have facilities with high quality
- Morden plane and flight team
- Strong reputation
- Insurance for passengers
- Based on Government decision
- The number of international flight is
low
- The prices of Vietnam Airlines is
higher than other airlines
- Delay flight
Opportunity Threat
- Have opportunity of market expansion
- Technology development
- Tourism in Vietnam development
- Disease
- Losing passenger when a lot of
airlines operate
- Government stop giving budget to
Vietnam Airlines
Strength
- It can be argued that government funding for a national and multinational airline network
is the best thing for Vietnam's airlines. Vietnam Airlines has a strong image, reputation
and reliability due to its large financial scale and modern and diversified aircraft fleet.
For decades, Vietnam airlines have been familiar to individuals around the globe, but
without having to advertise a lot, they have been preferred by consumers. Vietnam
Airlines is an official member of the SkyTeam Alliance, so there will be a larger regional
route network.
- The infrastructure of Vietnam Airlines, which ensures international quality, has been
completed and is eligible for international flights to and from the airport. In the A75 and
A76 factories, aircraft maintenance services are increasingly improving their quality and
are able to maintain modern aircraft. Vietnam Airlines also supported by Government
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with airport, petroleum, ground system… make the competitive with other airlines is very
high.
- Vietnam Airline is the first airline in the world have Boeing 787 and the Airbus A350
because Vietnam Airline is concentrating in the quality and service to develop airline
reputation. They invest money to buy a new plane can carry more passengers in a flight.
They owned 104 planes such as: Boeing 787-9, Boeing 787-10 and Airbus A350,
A321neo. With upgrade fleet and quality, Vietnam Airlines gradually their position.
- Vietnam Airlines have professional, enthusiastic and attentive staff, strong reputation and
occupied the large percentage of domestic aviation market.
- “Provide insurance services for customers traveling to any destination of Vietnam
Airlines. Enjoy your flight with peace of mind. With a reasonable fee from visitors, you
will be completely safe for unexpected situations with practical benefits.” Vietnam
Airlines is providing insurance for passenger when passengers travel by Vietnam
Airlines.
Weakness
- Vietnam Airlines based on Government decision, it can lead to slow and dependent
decision-making. The level of organizational stability is definitely not going to be high.
- The international flight network is too few, especially long flights compared to other
regional airlines such as Singapore Airlines, Cathay Pacific,… Right now, Vietnam
Airlines have 86 destination with direct flight and venture other airlines. Vietnam
Airlines doesn’t have direct flight to many developing and developed countries around
the world such as: New Zealand, UAE, … Other airlines has invest this market by
transfer flight such as Singarpore Airlines, … Example, if the customers want to flight to
New Zealand from Vietnam, they might be book Singapore Airlines. Singapore Airline
flight from Vietnam to Singapore for transfer and flight directly to New Zealand.
- Compare with domestic airlines, the prices of Vietnam Airlines is higher. If customers
have domestic flight, the cheapest is Bamboo Airway with 880000VND before tax, next,
Jetstar Pacific is 890000 VND before tax. The price of Vietjet Air is 900000VND before
tax. The most expensive is Vietnam Airlines with 1200000VND for each ticket before
tax.
- In 6 months from January to June in 2020, Vietnam Airlines is ranked the first place
which airlines cancel and delay flights (Civil of Aviation Authority, 2020). Vietnam
Airlines has 3544 delays flights with the rate of flight on-time is 91.9%. Vietnam Airline
which cancel flights more than other domestic airlines with 634 flights cancel.
Opportunity
- Vietnam joined WTO as a premise was developed for the aviation industry in Vietnam
get more progress in the future. It helps our country can create relationship to invest
direct flight from Vietnam to other countries in area. Vietnam Airlines have an
opportunity to expand their routes globally and domestically. Vietnam's airlines, with
many benefits and routes and government funding, can become a big business on the
continent if they know how to take advantage of them. Nowadays, technology is
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developing in new era 4.0. Many LED screen and advertise appear everywhere. Thus, it
helps Vietnam Airlines can easily promote their image. Vietnam Airlines create a website
with modernize payment systems to meet the demands of consumers in time to easily and
conveniently book tickets. For example: booking online, ...
- In 2019 from January to September, Vietnamese tourism peak a highest point of traveller
visit Vietnam with more than 12 million international customers (tong cuc du lich,2019).
It creates a condition to Vietnam Airlines expand more the international flights and
domestic flight.
Threat
- Because of Covid-19, Vietnam Airlines is stopping almost all the flight except rescue
flight by the Government decision and domestic flights. From the end of January 2020,
the air transport market started to decline sharply. Vietnamese airlines cut all flights to
China as of 26 February 2020, cut 34 percent of flights to Taiwan, and 92 percent of
flights to Hong Kong. Vietnam Airlines has not only implemented flight stops, seat
spacing and medical precautions over the past period, but has also actively participated in
the political tasks assigned by the Government, such as transporting citizens from abroad
back home, transporting relief goods, medical equipment and epidemic prevention
products from 27 February to 30 April, which amounts to 1,000 tons (for masks alone, it
is 1,000 tons). Domestic essential air transport demand is a special political task.(Viet
Hung, 2020)
The percentage of domestic flight of airlines industry in January to September in 2019 (source;
Sacombank)
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- Vietnam Airlines is at risk of fierce competition, losing market share when other companies
join, such as: Vietjet Air, Bamboo Airlines, Jetstar Pacific, VASCO. Vietnam Airlines'
percentage decreases to 31.5 percent in 2019 (Sacombank, 2019) Other, many international
airlines are using Vietnam Market with international flights with the policy of "open the sky."
More than 18 international airlines operate on the Vietnam market, such as: Singapore Airlines,
Emirates,... Vietnam Airlines has only 4 routes from Western Europe such as: Paris, Frankfurt,
London, Moscow. If passengers move to these four points from other major cities in Europe to
Vietnam while Middle East airlines needs to fly to all European cities. Emirates, for example,
flies to 33 cities in Europe with a frequency of 1-2 flights per day, collects passengers to
countries in the Middle East, and then flies back to Vietnam with a frequency of one flight per
day by large aircraft. On other airlines, this has a direct effect.
- Vietnam Airlines has not earned the budget new government capital for several years. Recently
the Government capital increased mainly as a result of the recognition that a capital investment
was sold to Vinapro Corporation, Vietnam Airlines. The Government finances Cambodia
Angkor Air projects by Vietnam Airlines. More specifically, the Government capital of Vietnam
Airlines is also smaller than its equity.
4. Interrelationship
SWOT Matrix
Opportunity
- Allow effective use of
the support of the
state
- Allow good use of
domestic economic
conditions.
- Satisfying the wishes
of visitors well.
- Enable social
variables to be used
well in Vietnam
Threat
- Poor reaction by low-
cost airlines.
- It is also slow to
implement scientific
components.
- Depend on the
retailer.
- Not making natural
variables accurate.
- Haven't drawn major
buyers and diversity
customers
Strength
- Low life span of flight
team
- - The technical staff
has more and more
advanced skills
- - There is a very high
degree of protection
of exploitation.
- High extraction seat
- Solution of Network
of flights: operated
flight network with
the demands of
customers, such as:
opn the direct flights
from Vietnam to
Australia
- Solution of Fleets:
upgrade the quality of
- Low-cost airlines:
Discount and
promotion for
membership and n
seasons.
- Operation policy:
operate new policies
with special meals for
different religion
customers.
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coefficient fleets to increase the
reputation
- Distribution system
Weakness
- Relative to its rivals, the
floor is thin.
- Qualified professionals do
not have a lot of air tactical
experience
- Standard of service isn't
high.
- There is no widespread
worldwide flight network.
- - Vietnam Aviation
Corporation's
financial capacity
remains small
- Airport: Because of
the Government
support, Vietnam
Airline can operate
the airport service
such as: waiting
room,.. for the
customer to providing
best quality of trial for
passengers
- Productivity and
service: increase the
quality of
productivities and
service make
customer stratify.
- Join Alliance as
SkyTeam: keep the
reputation and will be
the first choice of new
customers visit
Vietnam
5. Reference
Vietnam Airline 2019, Hàng không Châu Á tránh bay qua Iran, Vietnam Spirit, view by 3
January 2021, <http://spirit.vietnamairlines.com/vi/tintuc/hang-khong-toan-cau-93/
vnexpress-hang-khong-chau-a-tranh-bay-qua-iran-5694.html>
Anh Thư 2019, Toàn cảnh diễn biến vụ máy bay boeing 737-800 của Ukraine bị bắn nhấm,
Tuoitre, view by 3 January 2021, <https://tuoitre.vn/toan-canh-dien-bien-vu-may-bay-
boeing-737-800-cua-ukraine-bi-ban-nham-20200111140715347.htm>
Cường Ngô 2019, Việt Nam năm thứ 2 liên tiếp tang trưởng trên 7%, điều này là hiếm có,
Lao Động, view by 5 January 2021,< https://laodong.vn/kinh-te/viet-nam-nam-thu-2-lien-
tiep-tang-truong-tren-7-dieu-nay-la-hiem-co-775267.ldo>
Sacombank 2019, Báo cáo ngành hang không 2019, pdf, view by 5 January 2021 <SBS-
Bao+cao+nganh-Hang+Khong+2019.pdf>
Vietnam Airline 2021, Special meals, Vietnam Airlines, view by 5 January
2021,<https://www.vietnamairlines.com/vn/en/plan-book/experience/special-meals#>
Cục Hàng Không Việt Nam 2020, Tổng Hợp Số Liệu Khai Thác các chuyến bay đúng giờ
chậm, hủy của các hãng hang không Việt Nam 6 tháng đầu năm, Cục Hàng Không Việt
Nam, view by 5 January 2021 <https://caa.gov.vn/bao-cao-thong-ke/tong-hop-so-lieu-khai-
thac-cac-chuyen-bay-dung-gio-cham-huy-chuyen-cua-cac-hang-hang-khong-viet-nam-6-
thang-dau-nam-2020-20200708092702958.htm>
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Tổng cục du lịch Việt Nam 2019, Khách quốc tế đến Việt Nam tháng 9 và 9 tháng năm
2019, Tổng cục du lịch Việt Nam, view by 5 January 2021
<https://vietnamtourism.gov.vn/index.php/items/30149>
Viet Hung 2020, Vietnam Airlines đương đầu và vượt qua bão dịch covid-19 thế nào,
Vietnam Plus, view by 5 January 2021 https://www.vietnamplus.vn/vietnam-airlines-
duong-dau-va-vuot-bao-dich-covid19-the-nao/638994.vnp
Vietnam Airlines 2020, Vé Máy bay, Vietnam Airlines, view by 5 January 2021
<https://www.vietnamairlines.com/vn/vi/plan-book/flight-package>
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