A Detailed Case Study on The Feasibility Analysis of Bamboo Airways

This case study provides a comprehensive feasibility analysis of Bamboo Airways' business plan, focusing on its entry into Vietnam's growing aviation sector. It examines the background of FLC Group and Bamboo Airways, detailing their business strategy, objectives, and project details. The analysis includes a PESTEL analysis, SWOT analysis, literature review, methodology, break-even analysis, investment appraisal, and a questionnaire survey to gauge market demand and consumer preferences. The study assesses the political, economic, social, technological, environmental, and legal factors impacting the airline's success, along with internal strengths and weaknesses. The research questions address the project's viability, considering factors such as limited airport capacity and low personal income. The findings offer insights for FLC Group managers, particularly the chief financial officer, to effectively manage the project and make informed decisions regarding funding and operations. The study concludes with recommendations based on the analysis of results.

Running head: THE FEASIBILITY ANALYSIS OF BAMBOO AIRWAYS BUSINESS PLAN
The Feasibility Analysis of Bamboo Airways Business Plan
Name of the Student
Name of the University
Author Note

1THE FEASIBILITY ANALYSIS OF BAMBOO AIRWAYS BUSINESS PLAN
Table of Contents
Introduction......................................................................................................................................4
Objectives and definition of project............................................................................................4
Background Information..............................................................................................................5
FLC Group...............................................................................................................................5
Bamboo Airways.....................................................................................................................5
The Business Strategy..............................................................................................................6
The Details of the project................................................................................................................7
Research Question.......................................................................................................................7
Situation Analysis........................................................................................................................7
PESTEL analysis.....................................................................................................................7
The SWOT Analysis..............................................................................................................10
Literature review............................................................................................................................12
Methodology..................................................................................................................................13
Analysis of results..........................................................................................................................15
Break-even analysis...................................................................................................................15
Investment appraisal..................................................................................................................19
Responders’ experience with current airlines........................................................................23
Responders’ individual characteristics and demand for new brand......................................27

2THE FEASIBILITY ANALYSIS OF BAMBOO AIRWAYS BUSINESS PLAN
Conclusion and Recommendations................................................................................................31
Appendix........................................................................................................................................41
Questionnaire design.................................................................................................................41
The result of Questionnaire.......................................................................................................44
List of tables
Table 1:SWOT analysis of Bamboo Airways...............................................................................16
Table 2:Assumptions about Bamboo Airline project cost.............................................................17
Table 3:Bamboo Airline project break-even analysis...................................................................18
Table 4: Bamboo Airline project break-even sensitive analysis...................................................18
Table 5: Bamboo Airline project investment appraisal assumptions and estimations..................21
Table 6: Bamboo Airline project investment appraisal sensitive analysis....................................22
Table 7:Responders’ experience with current airlines...................................................................25
Table 8: Participants’ demand for more brand options in travelling by air and most important
factor..............................................................................................................................................29
List of Figures
Figure 1: Main drivers of airline revenue........................................................................................8
Figure 2:Feasibility process framework..........................................................................................9
Figure 3:Participants' level of monthly income and annual spending on travelling......................26

3THE FEASIBILITY ANALYSIS OF BAMBOO AIRWAYS BUSINESS PLAN
Figure 4:Participants' travelling by planes frequency and usual airline........................................28

4THE FEASIBILITY ANALYSIS OF BAMBOO AIRWAYS BUSINESS PLAN
Introduction
Objectives and definition of project
The topic of the business plan aims to provide thorough assessment for the technical
market and the justifications related to the finances behind the group decision of FLC. The group
decision for entering the growing aviation sector of Vietnam has proposed for a new airline
brand in Vietnam, that is the Bamboo Airways.
With the record of a mere charter capital of around USD 57.2 million and USD 200 million
package of loans which have recently been sanctioned to the Bamboo Airways, the development
of the feasibility of the project was seriously doubted(). Despite the deals with the Boeing and
Airbus investments of more than ten billions of USD, the construction of the project was still a
challenge due to the heavy requirements of the capital in the business of aviation together with
the lack of spare cash in the parent conglomerate().
The primary objective of the business encircles around the determination of the likelihood
regarding the success or the prospect of the project of the business before the funding and the
operation.Factors affecting the efficiency of the airline of the developing country, Vietnam
include limited capacity of the passengers in airport and low personal income. The research
paper argues towards strengthening the understanding in relation to the internal and the external
environment that encircles the project that furthermore allows the managers of FLC Group,
specially the chief financial officer towards the effective management of the project.

5THE FEASIBILITY ANALYSIS OF BAMBOO AIRWAYS BUSINESS PLAN
Background Information
FLC Group
One of the largest conglomerates in Vietnam, the firm owns and operates its business in
the field of mining, financial investments, real estate, vocational college and school. According
to reports of July 2018, the FLC Group targets to open their new business in the sector of
aviation in the country of Vietnam ().
Bamboo Airways
The Bamboo Airways or named as the Viet Bamboo Airlines is one of the essential
business plan of the FLC Group for expansion in the business of aviation. One of the objectives
of the airline company is to develop its base at Qui Nhon Airport. With the charter capital of
USD 30.8 million and VND 700 million, the directors of the board of the FLC Group aims to
double the size of the project charter to VND 1,300 million which is around USD 57.2 million as
per the reports on 13th July, 2018().
The directors of the company furthermore targets to operate the business in both the aircraft and
the flying leasing business. Within the year of 2018, May the company has reached one of its
targets of signing contracts with the Boeing and Airbus. The plan that was chosen included about
twenty four Airbus A321neo, five 777X aircraft and ten Boeing 737 Ma 9 aircraft. As per the
official statement from the FLC Group, regarding the Boeing and Airbus, the business has
completed a deposit regarding 787-9 Dream liner and expects to receive among 2020 and 2021
and a signed memorandum of the understanding (MOUs) in case of twenty four A321neo.The

6THE FEASIBILITY ANALYSIS OF BAMBOO AIRWAYS BUSINESS PLAN
deal with Boeing was worth around $5.6 billion which is approximately $280 million per 787-9
dreamliner which was an undisclosed deal with the Airbus. The deal with the European
corporation can be furthermore estimated to be of $3.05 billion which is $127 million per
A321neo, though there lies average price list for the Airbus aircraft and the non discounted
nature of the deal with the Boeing. The FLC group has furthermore launched one of the massive
hiring campaigns that included 92 pilots, 90 technicians, 250 stewardesses and 50 salesperson for
the purpose of covering the management of the new airline business. In the context of funding
for the new initiation of the business operations, the corporation announced the credit package of
USD 200 million from the credit Suisse AG as per the reports of 2018, July. The financial
capability of Bamboo Airlines towards the finalizing of the commitments with the Boeing and
Airbus from the year 2020 has been a question of doubt in the consideration of the deposit of
only USD 200 million credit package and the charter capital of USD 57.2 million.
The Business Strategy
The assignment focuses on the aim and the target of the business highlighting the
business plans for taking the advantage of the increasing or growing tourism industry together
with the lack of the competitor in the aviation sector of the country.
The FLC Group currently possess six golf courses and aims towards the increase in the number
to ten of them by the upcoming years. The business strategy furthermore includes the aim of the
new airline company towards its expected connection with the tourists to these spots from the
year 2019 with the use of lease aircraft from the third party lessors before the use of their own
planes from the Boeing and Airbus from the year 2020. As per the data and the report by
conglomerate chairman and owner, the Bamboo Airways aims to become one of the affordable

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costed airline and complement the carriers of the marketing leads, the Vietnam Airlines and
Vietjet which are known to be the largest luxury airlines and the low cost carrier of the country.
The Details of the project
Research Question
Situation Analysis
PESTEL analysis
Political factor
As a nation with socialist initiative, Vietnam has a genuinely stable status of the
governmental issues (World Bank, 2018). As per the political stability index record of the year
2016, Vietnam achieved 0.17 points or focuses and stood 90th among 200 nations through out
the world. The point spoke to a slow enhancement from - 0.02 points in 2014 and 0.07 focuses in
2015. However, the arrangement must be affirmed by the Prime Minister and other related
Governmental division in case of any household venture at impressive extension, before
inception.
Indeed, for Bamboo Airlines, there have been numerous choices issued by the
Government constraining the business exercises (VNS, 2018). Truth be told, the undertaking was
as of late endorsed by the accord assention from the Ministry of Planning and Investment, the
Ministry of Transport, Ministry of Finance, Ministry of Defense, Ministry of Public Security,
Ministry of Construction and Ministry of Natural Resources and Environment.
Economic factor

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One of the quickest developing markets on the planet is the Vietnam aviation, flooding at
roughly 17.4 percent per annum with developing interest from both local and universal voyages.
In the year 2017 it served more than 50 million travelers that included 13 million outside
explorers and about 40 million local ones.
Besides, air transportations re expected to flourish with government duty of US$15.4
billion which is about VND 350.5 trillion from the Transport Ministry for building up different
airplane terminals, for example, Long Thanh, Tan Son Nhat, Can Tho, Noi Bai, Van Don, Cat
Bi, Da Nang, and Phu Quoc by 2030 (Dezan Shira and Associates, 2018).
Social factor
Vietnam has a developing youthful populace of more than 90 million residents. The
nation is among the most crowded nation all around (Export.gov, 2018). With lion's share of the
statistic in the working age, the developing nation has a copious of laborers and high-rate of
urbanization for high-pay occupations. The expanding urbanization and enhancement of pay, in
this manner, adds to the expansion popular for residential goes for organizations, families trip,
and different purposes.
In any case, it ought to likewise be helped to remember the sparing propensities for the
Vietnamese which make value an essential factor for organizations to contend (Ho, 2017). As a
matter of fact, the flight advertise isn't a special case to this standard. As the carriers with most
minimal offered passage, Vietjet Airlines has ceaselessly encounter impressive development in
pieces of the pie over the most recent couple of years. In any case, given the ongoing increment
in accidents of the flights, cost may not be the main factor.
Technological factor

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Vietnam air terminals and the business of airlines are vigorously dependence on remote
innovative help and the technological support. Indeed, as of now, both Vietnam Air Traffic
Management (VATM) and air terminal engineers in the nation are looking for innovative
backings from global accomplices. Then, all planes in task in the nation are transported in from
abroad and specialized upkeep and support are somewhat constrained (Export.gov, 2018).
Therefore, in this perspective, all brands, including both the occupants and potential new
contestants, there ought not exist rivalry between the quality concerning innovation. The
distinction, at that point, would exclusively depend upon the average years old and categories of
planes. All things considered, new planes from either Boeing or Airbus can be purchased with
enough capital. Another of the potential difference among brands may be among the taffs and the
quality of the pilots.
Environmental/ Natural factor
Vietnam stands among the five of the nations which is most influenced by the
environmental change with higher chances in flood, tropical storm, and droughts. The
Government has yet presented any natural duties which may straightforwardly affect the
gainfulness of aircraft organizations. Up until this point, there has been only impetuses proclaim
supporting natural insurance exercises including charge exception and value sponsorship of
specific merchandise. However, these activities have little to do with aircraft business.
Legal factor
As per degree 92/2016/ND-CP, carriers need sufficient funding to work in the nation. In
subtle elements, endeavors with in excess of 30 airplanes are required to have least capital of

10THE FEASIBILITY ANALYSIS OF BAMBOO AIRWAYS BUSINESS PLAN
VND 1,300 billion for worldwide ventures and VND 700 billion for residential voyages (Dezan
Shira and Associates, 2018).
Beside this direction, the legislature confined outside possession in avionics business to
49 percent and constrained the exchange of offer and capital following two years in activity
(Dezan Shira and Associates, 2018). This move lessens the contestant of worldwide flight
business to surge the market and drive out neighborhood organizations.
The SWOT Analysis
To comprehend the association's abilities, clients, and business condition, the SWOT
investigation is completed as pursue
Internal
Factors
Strength Weakness
Having a place a gathering which
possesses numerous visitors spot the
nation over
Get bolster from a monetarily practical
combination with bundle bargain from a
main speculation bank.
Has the capacity to defeat the
boundaries for flight business permit in
Supervisors have no involvement in
dealing with an aeronautics business
Needs extensive budgetary asset to
enroll key HR from contenders since
the nearby supply is inadequate with
regards to (pilots, professionals, and
attendants)

11THE FEASIBILITY ANALYSIS OF BAMBOO AIRWAYS BUSINESS PLAN
Vietnam
Ease for renting old airplanes for local
flights
The nonappearance of a universal
airplane terminal in Qui Nhon (the
organization base) to port substantial air
ship like the 787-9 Dreamliner (Dung,
2018).
External
factors
Opportunity Threat
Barely any rivals in a developing
business sector
The travel industry is one of the
principle center for the Government
(Dezan Shira and Associates, 2018).
Current plane carrying warships in
Vietnam are inadequate in numbers to
furnish clients with quality
administration (Dezan Shira and
Associates, 2018)
Money related dissolvability –
addressing about the aggregate
budgetary capacity to look after
activities.
Legislative issues weight – Currently,
the combination bargains declaration
has diverged from Decision No.
836/Qđ-TTg issued by the Prime
Minister on ninth July about the extent
of the business (Dung, 2018).
Specialized issue and high operational
expense – the rented flying machines
for Bamboo Airways are excessively