group assignment course microeconomics eco111

Vietjet Air is Vietnam''''s first private airline, operating under the name Vietjet Aviation, JSCwith its headquarters located at Tan Son Nhat International Airport in Ho Chi Minh City anda

GROUP ASSIGNMENT

Lecturer: Nguyen Thi Thanh Nhan

COURSE: MICROECONOMICS - ECO111

Group members: 5

1 Bui Ngoc Thanh Tuyen - SS180071

2 Doan Thi Thanh Hang - SS171170

3 Pham Van Linh - SS160670

4 Nguyen Thi Phuong Thao - SS180029

5 Nguyen Le Ngoc Linh - SS180119

I, Introduction……… 3

II, Microeconomics and business operations……… 4

1.1 Total asset, total capital and total employee………4

1.2 Organization structure……….6

1.3 Business sector………7

1.4 Revenue, Cost, Profit……… 7

III, Market equilibrium………8

2.1 Demand of supply………8

2.2 Shortage or surplus……… 8

2.3 Competitors ……… 9

IV, Market structure……… 9

V, Strategies and applications……… 9

VI, Conclusion……….10

VII, References……… 11

VIII, Appendices………12

Vietjet Air is Vietnam's first private airline, operating under the name Vietjet Aviation, JSC with its headquarters located at Tan Son Nhat International Airport in Ho Chi Minh City and

a branch at the international airport Noi Bai in Hanoi City Vietjet was approved and licensed

to operate in November 2007 by the Minister of Finance of Vietnam On February 6, 2017, the company's shares were listed on the Ho Chi Minh City Stock Exchange, with the code VJC

In addition to the goal of sustainable development and a breakthrough mission in the aviation field, VJ not only provides transportation services but also brings rich services and products

to customers through convenient technology and useful tools It can be said that this is a new development in the global direction that VJ wants to bring to its customers VJ also offers many choices for customers with great and interesting experiences when using the airline's services In addition, VJ is increasingly expanding its international route network, improving service quality, and developing a sustainable development strategy With the possession of a wide network of flights throughout Vietnam and other countries in Asia such as Singapore, Thailand, Myanmar, Malaysia, Cambodia, Laos, Japan, Taiwan, Hong Kong, China, etc., VJ

is increasingly asserting itself position not only in the domestic market but also in the international market

VNR500 rating 37(B2/2022)-88(B1/2022)

Tax code 0102325399

Stock code VJC

Head office 302/3 Kim Ma Street - Ngoc Khanh Ward - Ba Dinh

District - Ha Noi Tel 028 3949 3949

Fax 024-37281838

Website https://www.vietjetair.com/en

Year of the

establishment

November 2007

(Source: General introduction, VNR500, 2023)

1.1 Total asset, total capital and total employee.

All of the resources that a company owns and can use to generate financial advantages are considered assets All gross investment, cash equivalents and cash, receivables, and other assets are included in them In 2022, Vietjet Air received 40.142 billion VND ( Vietjet, 2022) consolidated revenue which increased by more than 212% compared to 2021 (12.875 billion VND) and exceeded 23% compared to the budget (32.720 billion VND) Vietjet’s total assets were around 68.037 billion VND, up roughly 8.383 billion VND from 2021 (51.654 billion VND) or 12.3% Capital creates assets which are intrinsically tied to one another This gives information that total capital is equivalent to total assets and is 68.037 billion VND ( Vietjet, 2022) In which, the equity total has a balance of 14.898 billion VND and a total debt of 53.139 billion VND In addition, human resource development plays a vital role in a company

At this time, there are 6.016 total number of employees in 2022 at Vietjet, an increase of 509 individuals from 2021 (5.504 people)

(Source: Annual report, Vietjet 2022)

(Source: Annual report, Vietjet 2022)

(Source: Annual report, Vietjet 2022)

Vietjet Air is organised with a traditional hierarchical structure At the top of the structure is the Board of Directors, which oversees and directs the overall functioning of the company The company is then divided into several primary departments or units such as Board of Management, Committees, Auditing and internal control, Safety-security and quality assurance (SSQA),

In the organisational structure, the board’s chairman, Mrs Nguyen Thanh Ha, is the person in charge, and the other six members are: Mrs Nguyen Thi Phuong Thao, Mr Nguyen Thanh Hung, Mr Dinh Viet Phuong, Mr Luu Duc Khanh, Mr Chu Viet Cuong, Mr Donal Joseph Boylan ( Vietjet, 2022)

In addition, there are eight Vice Presidents AND Chief Accountant, A Managing Director and

a Chief Executive Officer on the Board of Management Three numbers of the supervisory board, together with other numbers of the board of organisation in the company, are chosen

by the General Meeting of Shareholders At 31 December 2021, Vietjet Air Company’s organisational structure also included 2 affiliated and 9 subsidiary companies

(Source: Annual report, Vietjet 2022)

Vietjet Air is a primarily engaged company in the field of passenger and cargo transportation

by air and has successfully built a closed supply chain of aviation services

The company has successfully established a closed supply chain of aviation services, including both passenger transportation and cargo transportation.Vietjet is one of the leading airlines in applying technology to its business operations They have been at the forefront of implementing electronic tickets instead of paper tickets, as well as utilising e-commerce applications In 2022, Vietjet continues to enhance the application of advanced technology, automation, innovation, and creativity They aim to boost digital business in activities related

to air transportation, cargo transportation, logistics, as well as strengthen and expand their aviation services such as ground services, training services, financial services, project investments, and other aviation services

The core operation of Vietjet Air is air transportation, which has been the company's focus since its inception With a new-generation airline model, Vietjet is the first airline in Vietnam

to apply this model, focusing on cost optimization and flexibility in business operations

In addition, Vietjet Air is also an aircraft manufacturer that collaborates with Airbus and Boeing through contracts that bring significant commercial value and numerous incentives

As an aircraft leasing company, Vietjet consistently provides flight rental services to domestic and international travel agencies Vietjet always strives to create favourable conditions and seeks investment opportunities to deliver high-quality ground services at airports, repair services, and specialised training in air transportation

1.4 Revenue, Cost, Profit

The semi-annual financial report of Vietjet Aviation Joint Stock Company (HoSE: VJC) for

2022, audited and verified, has revealed positive results in its business operations The consolidated revenue reached 15,934.6 billion VND, an impressive 111% increase compared

to the same period in 2021 Similarly, the after-tax profit amounted to 145 billion VND, marking a 19% rise Although the consolidated revenue and profit were adjusted downward due to a delayed aircraft commercial transaction, the growth rates remained highly promising

As of June 30, 2022, Vietjet's total assets stood at 62,669 billion VND The company maintained a debt-to-equity ratio of 1.09, while its current liquidity ratio reached 1.49, placing

it in the group with favourable ratios within the global aviation industry This demonstrates the stability and effective financial management capabilities of the company

Vietjet's business operations in the first six months of 2022 yielded positive outcomes, driven

by the strong recovery of travel demand, particularly in domestic routes, which experienced over 30% growth compared to the pre-Covid-19 period of 2019 Specifically, Vietjet conducted nearly 33,000 flights and transported 6 million passengers, marking respective increases of 135% and 200% compared to the same period in 2021 In terms of cargo transportation, the total cargo volume reached over 11,000 tons

Vietjet has been a pioneer in opening routes between Vietnam and India, offering 17 flight routes connecting major cities such as Hanoi, Ho Chi Minh City, Da Nang, Phu Quoc, with the largest cities in India The company has also reached agreements with Boeing and Airbus regarding contract restructuring, benefiting from support from manufacturers and

participating in investment programs in Vietnam, particularly in services, training, and production sectors

2.1 Demand and supply.

Demand and supply in the context of Vietjet Air refer to the number of flights and tickets demanded by passengers and the availability of these flights and tickets supplied by the airline

Demand for Vietjet Air's flights and tickets is influenced by various factors such, as affordability, and the overall economy Factors like tourism trends, business travel, and customer loyalty also affect the demand for flights

On the other hand, the supply of flights and tickets by Vietjet Air is determined by the airline's operational capacity, fleet size, routes, and overall business strategy Vietjet Air needs to forecast and manage its supply to meet the demand and ensure optimal utilization of its resources

The equilibrium between demand and supply determines the ticket prices and the overall flight availability If the demand exceeds supply, ticket prices may increase, and flights might

be fully booked Conversely, if the supply exceeds demand, ticket prices may decrease, and there may be empty seats on flights

Vietjet Air constantly monitors and adjusts its supply based on demand patterns to optimize its revenue and operations This involves strategic route planning, fleet expansion, and fare pricing strategies to the changing needs of passengers while managing costs effectively 2.2 Shortage or surplus

During the outbreak of COVID-19, the world aviation industry recorded a record loss of more than 84 billion USD, and Vietnam's airline Vietjet Air was no exception when it recorded a weighted air service revenue of 1.970 billion VND, a loss of 1.122 billion VND, down 54%

in the second quarter of 2020 When services and flights are plentiful but passengers do not demand to fly due to epidemics that adversely disrupt the aviation industry, this demonstrates

a severe shortage of demand compared to supply To increase tourism demand when the epidemic ended, there was a shortage of aircraft services because more people needed to get around Recognizing this, Vietjet Air has taken measures to make it simpler for customers to reach them, including opening more domestic and international routes, providing programs for finding cheap tickets for 0 VND, and lowering airplane prices so that they are affordable for the vast majority of people As a result, after COVID-19, revenue increased significantly With 31.3 thousand flights and 5.4 million passengers carried during the first quarter of 2023 (an increase of 57% and 75%, respectively, over the same period in 2022), the airline generated 12.880 billion VND in income from air transportation

2.3 Competitors

Some of the main competitors of Vietjet Air in the Southeast Asian aviation market include: Vietnam Airlines: As the national flag carrier of Vietnam, Vietnam Airlines competes with Vietjet Air on both domestic and international routes It offers a wide range of destinations

Asia It offers competitive prices and a wide network of destinations, which is in direct competition with Vietjet Air's low-cost business model

Thai AirAsia: As the Thai subsidiary of AirAsia, Thai AirAsia competes with Vietjet Air not only in Thailand but also in the broader Southeast Asian market It caters to both domestic and international routes and offers similar low-cost services

4 Lion Air: Lion Air, based in Indonesia, is one of the largest low-cost carriers in Southeast Asia It offers a comprehensive network of domestic and international flights, providing competition to Vietjet Air in terms of destination coverage and pricing

Jetstar Pacific: Jetstar Pacific, formerly known as Pacific Airlines, is a Vietnamese low-cost carrier partly owned by Vietnam Airlines and Qantas Airways It operates domestically within Vietnam and regionally, competing with Vietjet Air in the domestic market

IV Market structure

Vietjet Air operates within the market structure of an oligopoly, where a few major airlines dominate the industry in Vietnam Vietjet Air and Vietnam Airlines are the primary players, and they have a significant impact on market prices and conditions The limited number of dominant firms in this market results in high competition and interdependence Any strategic decision made by Vietjet Air can potentially affect its competitors, and vice versa This interdependence often leads to careful consideration of competitors' reactions when making business choices

In order to differentiate itself from competitors, Vietjet Air engages in non-price competition The airline is known for its low-cost model and vibrant branding, attracting customers with its unique offerings and marketing campaigns Non-price competition allows Vietjet Air to position itself as a low-cost carrier with a distinct identity in the market However, the oligopolistic nature of the market also means that there are barriers to entry for potential competitors Establishing a strong airline presence, including obtaining necessary licenses and acquiring aircraft, can pose significant challenges that deter new entrants from entering the market

V Strategies and applications

A key strategy of Vietjet Air is its low-cost carrier (LCC) business model, which involves minimizing costs at every stage of operations By operating as a low-cost carrier, Vietjet Air can offer competitive fares to attract price-sensitive travelers and capture market share Additionally, the airline focuses on expanding its route network to connect major cities within Vietnam and other countries in the region This strategy allows Vietjet Air to provide a wide range of travel options to its customers, cater to both leisure and business travelers, tap into new markets, boost passenger numbers, and maintain a competitive edge against competitors Vietjet Air applies vibrant branding and marketing efforts to raise brand awareness and attract customers By collaborating with celebrities, using creative advertisements, and organizing promotional events, Vietjet Air creates a strong brand image that resonates with its target audience, helping the airline stand out in a competitive market

Moreover, Vietjet Air emphasizes technology-driven customer service The airline offers user-friendly online booking platforms and mobile applications, enabling customers to easily search and book flights Vietjet Air also utilizes technology for self-check-in kiosks, real-time

provide a seamless and convenient travel experience, enhancing customer satisfaction and operational efficiency

VI Conclusion

In conclusion, private airline Vietjet Air has successfully cornered the Vietnamese aviation sector Through the report, we may learn more about the company's founding and growth, its micro-environment and internal business operations, its market equilibrium, and the market structure of Vietjetair as an oligopoly In the future, it is envisaged that vietjet air will develop the market and gain the preference of passengers on flights thanks to the strategies and applications we have described in the report