Một số đề xuất chiến lược phát triển hãng hàng không vietnam airline

VIETNAM AIRLINES CORPORATION Vietnam Airlines as a core unit, theforce of the air transportation industry in Vietnam, since its founding in 1956 untilnow has not stopped developing, expa

LUẬN VĂN THẠC SĨ Một số đề xuất chiến lược phát triển hãng Hàng không Vietnam Airline

INTRODUCTION

CHAPTER I – THEORETICAL BASIS

1 CONCEPTS

1.1 Strategy in Business - Business strategy

1.2 The role of business strategy

1.2.1 The role in planning

1.2.2 The role in prediction

1.2.3 The role in control

1.3 The types of business strategy

1.3.1 Strategic business combination

1.3.2 Overall business strategy

1.3.3 Other business strategy

2 THE FOUNDATION FOR BUSINESS STRATEGIES

2.1 Analysis and evaluation of external environment

CHAPTER II – THE SITUATION OF VIETNAM AIRLINES

1 BRIEF INTRODUCTION OF VIETNAM AIRLINES

2 MACRO ENVIRONMENTAL IMPACTS AFFECTING VIETNAM

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3.1.2 Cargo markets

3.2 The aviation industry environment

3.2.1 National airport development orientation

3.2.2 Airlines’ development orientation in Vietnam

3.2.3 Joint ventures with Laos, Cambodia, Myanmar airlines

3.3 Competitions and Strategies

3.3.1 Domestic Markets

3.3.2 International Markets

3.4 Vietnam Airlines financial reports

4 EXTERNAL AND INTERNAL ENVIRONMENT ASSESSMENT

CHAPTER III – VIETNAM AIRLINES’ DEVELOPING STRATEGIES

1 RESTRICTIONS AND WEAKNESSES

1.1 Delay in the equitization process and business renewal

1.2 Lack of uniformity in developing IT solutions and application

1.3 Developing quality services

1.4 Organization and human resource development

2 SWOT ANALYSIS

3 DEFINING VIETNAM AIRLINES STRATEGIES AND SUGGESTED

SOLLUTIONS

3.1 Network expansion strategy (product diversification)

3.2 Fleet development strategy

3.3 Organization re-structure and human resource training

3.4 Service quality development strategy

3.5 Brand development strategy

3.6 Alliance and cooperation strategy

CONCLUSION

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INTRODUCTION

Air transport sector in Vietnam from its inception has become an importantcomponent of the national economy, and become one of the key economic sectorsrepresenting the first mode of transport progress and modernity The growth of itsincreasingly large role and have an important influence in the work of economicdevelopment - cultural - social security and national defence The trend ofeconomic globalization and the trend of internationalization of economic life haspulled the growing trend of globalization in air transport development It isconfirmed that air transport, especially international air transport, is also animportant link of the global transport

VIETNAM AIRLINES CORPORATION (Vietnam Airlines) as a core unit, theforce of the air transportation industry in Vietnam, since its founding in 1956 untilnow has not stopped developing, expanded and improved services to become anairline of international standard

Looking back 10 years (2001-2010), though many events have great influence asthe terrorist attacks in the USA dated 11/09/2001, SARS in 2003, avian influenzafrom 2004 to 2005, economic crisis from 2008 -2009, Vietnam Airlines has always

in the right direction, overcome difficulties and flexible, and fast and strongdevelopment both in width and depth to rise up from a lack of airline experience,small scale, unknown, it has an airline average size of the area, dynamic, effective,active participation in the trend in the image and quality of service is recognized

Vietnam Airlines' fleet now has 70 aircraft; domestic route network of 20 points, 35routes, international route network includes 26 points, 40 routes to 15 countries.Transport capacity of VIETNAM AIRLINES reach 12 million passengers per year.Ticketing system for Vietnam Airlines has grown to 43 countries VIETNAMAIRLINES owns an advanced labour force, devoted to their careers The number ofVietnamese pilots are 372 people, aircraft technicians who help VIETNAM

AIRLINES 1269 initiative in mining operations, aircraft maintenance VIETNAMAIRLINES has partnered with 80 airlines around the world are members of theAssociation of World Aviation (IATA) and SkyTeam global airline alliance

Looking to the future, period of 2011-2020 is considered the strategic period,opportunities for innovative development of the aviation industry in Vietnam.According to the evaluation of the economic organizations (IMF, WB, ADB ),airlines (IATA, ICAO) in the world, Vietnam is located in the dynamic growthpotential of the world's most economic and aviation market Besides, this is aturning point in the stage of development of production technology of the aircraftmanufacturer with the introduction of the new generation aircraft such as B787,A350, MRJ, Bombadier CSeries with the preeminent features on amenities andpassenger services, using advanced materials, efficient fuel saving, environmentallyfriendly make opportunities for the young airline policy implementation, " thecapture of opportunities” to raise competitiveness Under the plan, the period of2010-2020 as well as deployment time and a complete range of developmentcategories of aviation infrastructure in Vietnam with the launch of the Long ThanhInternational Airport, the services capacity reached 80-100 million passengers peryear (reaching world-scale), Noi Bai International Airport, Tan Son Nhat with theircapacity reached up to 50 million passengers per year (at regional scale), a series oflocal airport upgraded After the open sky agreement of CLMV sub-region(including Cambodia, Laos, Myanmar and Vietnam) is effective in April 2007, withthe success of cooperation projects between Vietnam and Cambodia, established thenational airline of Air Angkor Cambodia Cambodia (K6), together with efforts tonegotiate actively to develop a similar model of cooperation in Laos and Myanmar,the coming years will be the time for comprehensive cooperation, mutualdevelopment of the national airline of CLMV sub-region, and Vietnam plays a keyrole, is the gateway of the sub-region

Therefore, the organization for development and implementation for developmentstrategy of VIETNAM AIRLINES to 2020 must be sync from market development

strategies, route network, aircraft resources to strategic human resource development,branding, capacity sales, services, capital and operating mining policy, safety andsecurity is essential to develop VIETNAM AIRLINES consistent with the trend ofmovement of business environment, the aviation market, to capture opportunities inthe future, thereby elevation of Vietnam Airlines became the large airlines in theAsia-Pacific, with prestige, image are confirmed on the global scale, plays a key role

in the operation of air transport of CLMV sub region, to contribute effectively toeconomic development - politics – society of Vietnam

On research methods:

Using direct study methods: Collecting information from newspapers, magazines,the Internet, and other statistics from the documents have been published, thefinancial statements, balance sheet and reports of business report in 2008, 2009 andearly 2010, the rules and regulations of Vietnam Airlines

Also using the group of analysis method, summary, comparative approach toanalyze the business activities of the Company

Structure of topics:

On the basis of the program suggests, the group structure of the topics include:

Introduction

Chapter I: THEORETICAL BASIS

Chapter II: ANALYSIS OF CURRENT SITUATION

Chapter III: STRATEGIES FOR DEVELOPMENT OF VIETNAM AIRLINES

AND RECOMMENDATIONS

Conclusion

CHAPTER I –THEORETICAL BASIS

1 CONCEPTS

1.1 ‘Strategy’ in business – Business strategy

The concept Strategy existed from ancient Greece This term was originally derivedfrom military Later it developed into science and art of military command Butfrom the '60s (XX century) strategy applied to business and from which "businessstrategy" was born There are many different definitions of strategy and each is verydifferent depending on the concept of each author We would like to point out herethe concepts of strategy suit to the subject and scope, the object of the research

group: "Strategy is the direction and scope of an organization in long term to gain

competitive advantage for organizations through the format of its resources in a changing environment, to meet market demands and satisfy the expectations of the concerned parties "(Johnson, G., Scholes, K (1999) Exploring Corporate Strategy, 5th Edition Prentice Hall Europe).

Under the traditional approach, the strategy is the determination of the basic term goals of the enterprise, and the implementation of action plans to allocateresources, to achieve the objectives of the business identified Can also define the

long-business strategy as follows: Business strategy: "As a series of commitments that a

company uses to gain a competitive advantage by exploiting core competencies in certain markets” It may be said that business strategy is the way that businessesuse to guide the future to achieve and sustain its development

The nature of the business strategy is to outline the future image of regionalbusiness activity and the ability to exploit

Business strategies used by 3 basic meanings are:

- Identify long-term goals of the business

- Give the general action plan

- Select the action plans, employ the allocation of resources to implement thosegoals.

1.2 The role of business strategy

1.2.1 The role in planning

Business strategy will help businesses identify their purpose in the direction of thefuture-oriented activities in the long term, is a solid basis for the implementation ofthe operation, help Administrator know, review and direct for their organization inright direction, by any method, and any time to achieve results

1.2.2 The role in prediction

In the trend of globalization, the business environment is always fluctuating.Therefore the environmental analysis and development of business strategies willhelp business managers are aware of opportunities, and risks occur at the same timeaware of the strengths and weaknesses in their business Since then analyze andpredict the environmental conditions in the future, to make appropriate strategies totake advantage of opportunities, strengths, reduce the risks, weaknesses toovercome any business challenges

1.2.3 The role in control

Business strategies can help Managers use and allocate the resources appropriately,make appropriate decisions for each condition of the business environment, increasethe links between employee, strengthen capacity to prevent and stop the riskoccurring, avoid the financial risks Improve the efficiency of production ofenterprises, so that enterprises can develop to sustainable stability

1.3 The types of business strategy

1.3.1 Strategic business combination

This strategy is outlined based on the analysis of the environment inside and outside

so that the enterprise can see clearly its strengths, weaknesses, opportunities,challenges and strategies that will be combined as follows:

- Take advantage of strengths to exploit opportunities in business (SO);

- Take advantage of the strengths is to limit the risk in trading (ST);

- Take advantage of opportunities to overcome weaknesses (OW);

- Minimize weaknesses to limit risks (WT)

1.3.2 Overall business strategy

Strategy refers to the most important issues with significant long-term meaning anddecisions of vital issues of the business, including 4 categories:

- Strategies focus on the key issue, not spread resources, focus on those activities

is crucial for business;

- The strategy is based on analysis of the comparative advantage of the businesswith other businesses to find their comparative advantages to develop business;

- Creative strategy, exploration for new products and services;

- Strategies to explore the possibility of the environment is to find the key factors

1.3.3 Other business strategies

- Business strategy is on the front, rear, horizontal, vertical;

- Penetration strategy and market development, product development;

- The diversification strategy;

- The strategy for risks prevention

2 THE FOUNDATION FOR BUSINESS STRATEGIES

The identification of business goals is the important beginning stage It requires thatbusinesses must identify the tasks and objectives pursued by enterprises in their

business At the same time, business processes must clearly indicate the validity andethics of business to society.

When identifying the tasks and objectives, and business areas of the business, it isnecessary to analyze the factors affecting the group, as the basis for thedevelopment of business strategy

2.1 Analysis and evaluation of external environment

2.1.1 Macro environment - economic environment, politics, society

Macro environment includes factors of economic environment, politicalenvironment, social and cultural environment, lawful environment, environmentaltechnology, natural environment, global environmental impact images effect on thesurvival and development of the business

a Economic environment (economic factors)

The main factors affect the operation of enterprises in the economic environmentare: The growth speed of the economy, interest rates, exchange rates and inflationrates Economic growth or recession has great influence to the enterprise, if theeconomy have higher growth will create many opportunities for businesses toexpand operations, whereas if the economy economic downturn will lead consumers

to reduce costs and increase the risk for businesses.The interest rate will determinethe demand of business policy on exchange rates, inflation also creates anopportunity or increases risks to the enterprise

b Lawful environment and politics (elements on law and politics)

Lawful environment and politics may impact significantly on the business can also

create opportunities and vice versa can also create risks for the enterprise

This environment includes: political stability, the policy of the legal system (ieinvestment law, labour law, environmental law resources tax policies, fees,regulations on advertising reports )

c Socio-cultural environment (cultural, social factors).

These factors include the following elements: lifestyle, ethics, traditions, consumerattitudes, the role of women, population growth, population shifts, the marriage rate,birth rate birth, educational level, the establishment of associations to protectconsumers These factors create opportunities or threats for enterprises

d Technological factors.

Technological changes may alter production methods, products’ life cycles, changes

in technology and their products with better quality, cheaper costs This is an factoraffects largely and directly to the business strategy of the enterprises So in theprocess of building the business strategy of the enterprise need to analyze specificfactors as well as technology development trends in technology to get their businessstrategy accordingly

e International environment (international factors).

Currently trend of regionalization and globalization has been an inevitable trend.Thus the risks, opportunities from the international environment affecting businessmore complex, larger, due to differences in culture, society, institutional structures,policies and economics.So every business must approach and analysis environmentperspective of their industry In which factors on free trade agreements, tariffbarriers, international quality standards, antitrust, anti-dumping must be analyzedcarefully to take advantage of limited risk, building business strategies accordingly

2.1.2 Micro environment

Elements of the micro-environment include: pressure from customers (buyers),pressure from suppliers, the risks from potential competitors, the risks fromalternative products and services, the existing competitors A theoretical and practicalstrategy of the Harvard School of Business Administration - Michel Porter hasdeveloped five models of competitive pressure as a basis for strategies to help

environmental analysis is as follows (Source: In-Class Materials & Strategicmanagement textbook, 2009 – Le The Gioi, Nguyen Thanh Liem, Tran Huu Hai):

a Analysis for current competitors

This is the first force in the model of M Porter This force is competitors arealready positioned in the market, if the competitors are still weak; the businesseswill have the opportunity to increase the prices and can get more profits.Conversely, the greater competitive pressure on price competition is increasinglyfierce.The analysis of the current competition requires firms to learn, to investigatethe specific information of competitors On that basis, analysts were technicalpotential, the potential of human resources, financial capacity, marketing systems,operations management, capacity, quality, leadership ability to see clearly thestrengths and weaknesses of the competitors (Source: In-Class Materials & Strategicmanagement textbook, 2009 – Le The Gioi, Nguyen Thanh Liem, Tran Huu Hai)

No Factors Importantlevel Competitor A Competitor B Corporation

Thereby making the general remarks of the competitors against businesses

Enterprises and competitors

Competition in the industry

Ability to pressure from suppliers

b Potential competitors

These are the competitors include the existing enterprises are not competitive, butthey are able to compete if they decide to enter the industry The number ofpotential competitors depends greatly on the barriers to entry So when consideringpotential competitors to analyze all elements from the entry barriers to industryadvantage on scale, product differentiation, capital requirements, switching costs,the ability access to distribution channels, cost disadvantages regardless of size,government policies and actions can cope, to assess fully the risks from potentialcompetitors

c Suppliers

This force includes suppliers on raw materials, fuels, materials, equipments, labour,transport, and services It can be seen as a pressure when they are capable ofincreasing input prices or reduce the quality of products and services they provided.Therefore, when developing business strategies, the enterprises need to analyze anddevise an appropriate strategy for this force

d Customers

This is the force that creates the bargaining ability of the buyer, if there are manythe buyers, it could create opportunities for business, whereas it can be seen as athreat to require businesses forced to reduce prices, or that higher quality of goodsand services

e Alternative products

The alternative products are other products that can satisfy the needs of consumers

To predict its risks from alternative products and limit the risks to the enterpriseswhen developing business strategies need to analyze the prediction in policy, thedevelopment of science, technology, price trend whole, the trend of consumers tobuild business strategies accordingly

Beside 5 above factors in the process of developing business strategy needs to payattention to other factors such as the distribution system, community and union tofully analyze the opportunities and risk for enterprises to build business strategiesaccordingly.

Combining elements of the macro environment and micro environment have thefollowing diagram (Source: In-Class Materials & Strategic management textbook,

2009 – Le The Gioi, Nguyen Thanh Liem, Tran Huu Hai):

The analysis of the external business environment is very important for everybusiness, it helps to identify business opportunities and the threat to the proposedbusiness strategy accordingly To assess the impact of external environment onbusiness activities of the creation of the Matrix (EFE) - (Source: In-Class Materials

Potential competition

Enterprises andcompetitors

Alternativeproducts

Pressure from buyers

Pressure from

suppliers

Social, culturalenvironment

Technologicalenvironment

Naturalenvironment

Economic

environment

Legal, political

environment

& Strategic management textbook, 2009 – Le The Gioi, Nguyen Thanh Liem, TranHuu Hai)

EFE Matrix

2.2 Analysis and evaluation the internal environment of enterprises

The analysis and evaluation of internal environment within the enterprise aims toappreciate its strengths, weaknesses and competitive advantages to build theirbusiness strategy accordingly It is necessary to analyze financial factors,infrastructure, technology, marketing, human resources, manufacturing, researchand development, operations management, branding, company culture to promoteall the limited strengths weaknesses, create competitive advantage for businesses

2.2.1 Human resources

This is a very important resource, it is associated with the existence and development

of the business Human resources administration of the business is the recruitment,training, placement, appointment, transfer, and personnel policies The analysis ofhuman resource factors aims to clearly see the strengths and weaknesses in themanagement of enterprise human resources to work out an appropriate strategy

2.2.2 Financial capacity

Analysis and assessment of these factors on the basis of considering the specificfacility factory machinery, raw materials, modern level of technology thatcompanies are applying and evaluating the current status about the financial

ce of factors 0,0 ÷ 1

Factors classific ation 1 ÷ 4

Points of elements

on the list Scoring

factors

situation, the total assets, capital, capital structure, profitability, ability to raisecapital, ability to secure financing of the enterprise

Analysis and assessment of financial activities of the business to evaluate thefinancial and accounting activities can meet the task requirements or not, or guaranteethe truthfulness, which draws from the strengths and weakness of this activity

2.2.3 The work of production and operations

Analyzing and evaluating the work of production and operation of enterprises onthe basis of analysis of production plan, plant capacity, considering the scale isjustified, considering the efficient use of wireless Advanced Technology in themanufacturing operation, evaluating the quality of the work force, quality of goodsproduced, assess the cost of production or cost of a product unit, to clearly see thestrengths weaknesses of the enterprises in this work

2.2.4 Marketing activity

Analyzing and evaluating the work of Marketing of the business is to focus onanalysis and evaluation of systems Marketing, plans on products and services, sale,customer analysis, pricing problems, issues about the effectiveness of the Marketing

to clearly see the real situation of enterprises in this work, clearly the strengths andweaknesses to build an appropriate strategy

situation of operation of the business administration clearly see the strengths andweaknesses in this work On the other hand, need to clearly analyze the leadershipcapacity of the business, if business leaders have good qualifications for enterpriseswill grow and if the leaders do not have the business capacity, the enterprises cannot grow or survive.

2.3 Method of strategy analysis: SWOT Matrix, IE Matrix

2.3.1 SWOT matrix

SWOT matrix is a matrix of strengths - weaknesses - opportunities - risks Thismatrix helps managers form strategies based on a combination of factors ofstrengths, weaknesses, opportunities, risks (Source: In-class materials & Strategicmanagement textbook, 2009 – Le The Gioi, Nguyen Thanh Liem, Tran Huu Hai):

SWOT Matrix

SWOT

MATRIX

Strengths – S1………

2………

3………

Weaknesses,- W1………

- S-O strategy : Use the strengths to take advantage of external opportunities

- W-O strategy: Overcome the weaknesses to take advantage of externalopportunities

- S-T strategy: Use the strengths to cope with threats

- W-T strategy: Overcome the weaknesses to reduce the external threats

2.3.2. IE matrix : Evaluation of external and internal factors

Using parallel to the SWOT matrix for comparison with the SWOT matrix, it ismore quantitative (Source: In-Class Materials & Strategic management textbook,

2009 – Le The Gioi, Nguyen Thanh Liem, Tran Huu Hai)

Strong – 3 Average – 2 Weak – 1

- If enterprise is positioned in the 3 cells 1, 2, 3: under the fast-growing area

- If the strategy of the business is positioned in the 3 cells 4, 5, 6: a selectivegrowing area or stable selection strategy

- If enterprise is positioned in the 3 cells 7, 8, 9: as retreating orientation

With the contents described above, we considered and studied the entire theoretical basis, concepts, theories and analytical basis to develop business strategies of enterprises We must capture firmly theoretical basis to be applied in practice in your business to set out guidelines and strategies in accordance with objective rules to ensure the survival and development of enterprises

CHAPTER II –THE SITUATION OF VIETNAM AIRLINES

1 BRIEF INTRODUCTION ABOUT VIETNAM AIRLINES

Enterprise ’ s name: Vietnam Airlines Corporation (referred to Corporation)

Type of enterprise: MTV Co Ltd.

Head office : No.200 Nguyen Son street, Long Bien district, Hanoi city

Representative : Mr Pham Ngoc Minh – General Director

Charter capital : 8.942.000 million dong

Scope of business: Investment, management on investment capital and direct

production, Air transport for passengers, baggage, cargo, parcels, Maintenance ofaircraft, engines, spare parts, aviation equipments and other technical equipments,Production of components, spare parts, supplies of aircraft and other technicalequipments; Supply of technical services and spare parts for airlines in the countryand abroad Import and export of aircraft, engines, spare parts, aviation equipments(rent, lease, hire for purchase, purchase and sale) and other items as prescribed bythe State Supply of technical and commercial services in ground, services at thepassenger terminal, cargo terminal and services for delivery of goods Agencyservices for airlines, aircraft manufacturers, engines, equipments and spare parts ofaircraft, other transport companies General aviation operations

A brief history of formation and development: Vietnam Airlines Corporation was

founded on 27/05/1996 under Decision for formation of State-owned Enterprise No.328/TTg of the Prime Minister based on links of 20 businesses in aviation services,and Vietnam Airlines is considered as the core By 04/04/2003, the Prime Ministersigned the Decision No 372/QĐ-TTg on the pilot organization and operation underthe Parent Company - Subsidiaries in Vietnam Airlines on approval fororganisation’s charter and operation of the Parent Company, Vietnam AirlinesCorporation Accordingly, Vietnam Airlines Corporation is a State-ownedCompany, operating under the Law on State –owned - Enterprises By 23/06/2010,

the Prime Minister signed the Decision No.952/QĐ-TTg on the on transformation

of the Parent Company - Vietnam Airlines Corporation Company founded MTVCo., Ltd owned by the State

Structure model of organization: Corporation shall operate under model of the

Parent Company - Subsidiaries based on the experience of some advanced airlines

in the world such as Singapore Airlines, Cathay Pacific, Thai Airways By30/06/2010, the Corporation included 4 dependent units, 15 Subsidiaries, 01 serviceunits and 09 associated companies

2 MACRO ENVIRONMENTAL IMPACTS, AFFECTING THE ACTIVITIES OF VIETNAM AIRLINES

2.1 Period of 2001-2010

2.1.1.Economic, politics, social environment

Decade of 2001-2010 as the decade witnessed the rise of emerging economies such

as China, Brazil, India and other economically dynamic region such as ASEAN,Latin America World economic growth has averaged 3.2% per year, thanks to thedrag of the crucial ship of this growth Economy, once again made clear cyclicalfeature with crisis on global scale 2008-2009, making air transport marketdecreased in this decade

Political situation, regional security and world in past 10 years has beencomplicated Terrorist events on 11/09/2001, war in Afghanistan, Iraq and theSARS disaster (2003), avian influenza in 2005 had occurred and negative impact tothe airline industry, made passenger markets dropped sharply, the cost of insurance,market launch costs has risen

Since 2006, jet fuel prices increased strongly and impacted continually on theoperation of airlines Particularly in June of 2008, oil prices up to $ 147 per barrel,fuel costs for airlines rose up to nearly 40% of total costs, while normally onlyabout 25-28% The crisis and increases in fuel prices continually affected strongly

to the airlines, the aviation market in the world lost $ 50 billion in past 10 years.Many small airlines have been forced to protect its bankruptcy, must be reformed,merged or restructured.

Located in the economically dynamic region in the world, Vietnam is one of the feweconomies in Asia - Pacific region to achieve and maintain growth rate is relativelyhigh in a long time Economic growth in Vietnam highest in the ASEAN region andsecond in Asia - Pacific, after China Growth of average GDP in period of 2001 -

2007 reached 7.73% per year Period of 2008-2009, although affected by the globaleconomic crisis, but Vietnam demonstrated the ability to overcome the crisis withGDP growth of 6.2% in 2008, 5.3% in 2009 and growth of 6.5% as forecast in

2010 Per capita income in 2010 is forecast at 1200 USD, increased by 2,9 timescompared with 2001

After 10 years for implementation of economic –social development strategy in2001-2010, Vietnam's economic potential is enhanced, the country was out of theunderdeveloped status, entered the group of developing countries with averageincome Domestic political situation is stable, Vietnam has been a safe destination

in the region Vietnam has officially joined the WTO in early 2007, opened up newopportunities to enhance cooperation, a new economic development

By the end of 2009, there were 89 countries and regions invested nearly 11,000projects in Vietnam with total registered capital of 178 billion dollars, in which $ 68billion was made Vietnam's credibility has been enhanced than before Despiteglobal crisis, but official development assistance (ODA) to Vietnam in late 2009commitment is up to 8,063 billion dollars, this demonstrated that the investmentenvironment in Vietnam is still attractive, foreign investors continue to believe inthe medium and long term future in Vietnam

Policy fort development in period 2001 - 2010 have been somewhat changed theface of tourism in Vietnam Vietnam tourism growth is relatively stable withaverage speeds are relatively high (about 20% per year), promote the development

of many other economic sectors, particularly air transport industry Tourism ispositioned in the list of 5 industries of largest foreign currency income generationfor the country with 4,05 billion dollars in 2009, accounting for over 55% in thestructure of service exports.

With the high attraction of tourism and business confidence, a growing number oftourists and the businesses in the world will evaluate Vietnam as their destination.Until now, Vietnam Tourism has signed 43 cooperation documents with othercountries and territories around the world, customers relationship and partners withover 1,000 customers of 60 countries and territories

However, the quality of tourism services in Vietnam is not high, monotonoustourism products, lack of particular, low uniformity (low active links between unitsproviding travel services, accommodation, value-added services ), duplication andlack of regulation; The tourism industry may have launched the program to scaleand efficiency, not brand development strategies for tourism, quality relationship -price is not reasonable, leading to overall quality of tourism is less competitive andreduce the attractiveness, Vietnam is still considered expensive destinationcompared to other countries in the region These are the main factors that reducedcompetitiveness and limited Vietnam's tourism sector with higher growth

Aviation market of Vietnam in particular and Asia - Pacific region in general havefastest development speed in the world General aviation market in Vietnam, grewabout 15% - 20% per year, of which domestic market growth is always above 20%.The crisis years 2008, 2009, the aviation market in Vietnam has increased about 4%per year

Besides the favourable macroeconomic conditions, VIETNAM AIRLINES oftenreceives attention from the Party, Government, promptly removes the difficulties,supports and facilitates the expansion and business development activities,particularly in development of fleet, enhancing competitiveness

Chart Comparison of macroeconomic indicators of Vietnam and guests

output of Vietnam

(Source: Corporate Planning Department – Vietnam Airlines)

Along with the end of the Cold War, the advent of the Internet, advances ininformation technology sector, telecommunications has opened a new era ofglobalization a powerful place, promoting capital flow movement investment,resources, trade and exchanges worldwide

2.1.2.Legal environment

International Aviation is not out the trend of globalization, the civil aviationoperations is dominated by the trend of globalization of world economy, the trend ofliberalization and commercialization activities of civil aviation; trend of reducing theprotection and control of the state through privatization of airlines, airports; trend ofalliances, links, purchase, merger between the airlines continue to develop stronglyand the trend of creating competition among the major airports in most areas Series

of aviation alliances such as Star Alliance, OneWorld, SkyTeam continue to admitnew members and expand their activities The merger and acquisition servicesbetween major airlines such as Delta - Northwest, Air France-KLM (Royal DutchAirlines) help companies get into troubles can stay in the market

GDP growth Growth of international visitor to VN Growth of aviation market

Growth of output visitors of VN

The past decade has witnessed the birth and growth of the business model, traditional airlines - low cost airline (LCC Low-cost carrier), made significantchanges in the global aviation industry, including Vietnam On the one hand, LCChas launched promoting market size, which gave more products for customers tochoose with lower costs On the other hand, by taking to reduce costs and low faresare condition to exist and develop, LCC has pushed the market competition in airtransport around the world becomes more intense, that even make LCC is moredifficult to survive due to low capital resources (80-85% LCC bankrupted withinthe first 5 years), and also made the traditional airlines shared its strong market andembarrassing to deal competition with LCC.Actually showed that moderate growth

non-of the number non-of airlines will help promote the healthy development non-of the market,but if the growth in large numbers, it can affect the ability to focus and use ofresources, effectively, which should only be limited in each national economy.According to World Aviation Association IATA, rapid growth in developingcountries and the recovery in North America helped the world's aviation industryrecovered quickly this year to forecast profitability in the airline industry in 2010 to15.1 billion dollars thanks to the global economy has recovered, went up to against8.9 billion previously This record sales marks the unexpected recovery of theindustry after losing 10 billion dollars in 2009 and 16 billion dollars in 2008 DirectorGeneral of IATA, Mr Giovanni Bisignani, said that the world is changing forairlines, the market is developing quickly moving industry centers on the East.(Saigon Marketing Newspaper – 15/12/2010)

In recent years, to meet market demand as well as support social and economicdevelopment of the local general in the country, market and domestic route networksubject to control strictly from the State, especially in the approval of prices Thispolicy brought into play surely in stabilizing prices, mutual support between theeconomic sectors, between localities, contribute to economic development of thecountry, but the sector also revealed significant weaknesses On most domestic flights,

VIETNAM AIRLINES often covers losses or provides perfunctorily, the law of supplyand demand are not reflected properly.

Roadmap for sociable application rates started from 2003, in the unfavourablecontext for the airline industry, but has confirmed the correctness of the policy andhave proven that the "publication in domestic air transportation" sync with themarket of the service sector (payment for the law of supply - demand) as solution isbeneficial to the overall national economy, the economic development of localsociety, business of air transport and consumers (passengers) compared to thesupply perfunctorily granted in nature The application of market mechanisms fordomestic aviation market has been carried out by most countries in the world andactually proved its correctness

In 2007, the Ministry of Transport has regulated its landing duration (slot) at theairports of Noi Bai and Tan Son Nhat, making the ability to regulate the domesticlanding duration to negotiate and arrange hours of operation with the internationalairport of VIETNAM AIRLINES is strongly influenced by the right to regulateinternational airport mostly belong to the national airlines

Law on Vietnam Civil Aviation was adopted in June 2006 to build a premise for thesocialization of the air transportation industry, has created a driving force forcompetitive air transport market of Vietnam, developed with fast speed

On the basis of Law and documents under the Law (Decree No 76/2007/ND-CPdated 09/5/2007 of the Government), 4 new private airlines were established areIndochina Airlines, VietJet Air, Mekong Air and Trai Thien Air Cargo; In whichIndochina Airlines, which has exploited the official first commercial flight on24/11/2008 used 02 B737-800 aircraft with two flight operators, but stoppedoperating in late 2009 VietJet Air, Air Cargo Trai Thien, Mekong Air in theimplementation phase are exploited

Thus, Vietnam currently has 08 airlines licensed the business certificate of airtransport are (i) 04 existing airlines are Vietnam Airlines, Jetstar Pacific Airlines,

VASCO, SFC (helicopter operators) and ( ii) 04 new businesses are VietJet Air andIndochina Airlines, Mekong Air and Trai Thien Air Cargo.

Vietnam has signed aviation agreements with 58 countries and territories, includingall the economic powers in the world and participated in the multilateral aviationagreements such as the Multilateral Agreement on air transport of Cambodia, Laos,Myanmar, Vietnam (CLMV), ASEAN multilateral agreements with the EC floortreaty The trend of liberalization of air transport policy brings challenges, but alsoopens new business opportunities

2.1.3.Aviation infrastructure

Aviation infrastructure in the country has been gradually expanded and modernized,priority investment and development planning in sync Aviation infrastructure,airports, particularly at the airport is the gateway for new investment and upgrading.Many large projects are deployed and put into operation as well as improved servicequality for air transport, especially the construction of new Terminal 1 at Noi Bai,international terminal at Tan Son Nhat

However, despite these developments, the aviation infrastructure is not far frommeeting the international requirements and standards, to meet long-termdevelopment plan for the sector The main airports of Noi Bai, Tan Son Nhat afternew construction and upgrading of several years has been in active status overload,lack of aircraft parking, terminal cramped, lack of procedures for counter .partially affect the growth of the aviation market So far, VIETNAM AIRLINESwith the role of a national airline, yet there are not distinct advantages in the airportgrounds, as well as aviation stations in particular, while the major airlines in theregion and the world has its own train station at the airport grounds

2.1.4.Tourism infrastructure in Vietnam

System of technical facilities, accommodation and travel services are developingfast, quality is improved Vietnam has many resorts, resort, entertainment, luxury

been known as a trademark of Vietnam tourism The end of 2009, there were10,900 tourist accommodations with more than 215,000 rooms (3 times compared

to 2000), in which 184 accommodations were rated 3 stars with 13,168 rooms, 95accommodations were classified 4 star rating with 11,628 rooms and 35accommodations were rated 5 stars with 8,810 rooms

Although it has been invested so much, but the infrastructure for tourism is stilllimited, the lack of serious hotels in high season can not be overcome within a fewyears that made the production costs of Vietnam's tourism products are moreexpensive compared to other countries in the region

2.2 Period of 2011-2020

2.2.1.Economy, politics, social environment

After the severe crisis in late 2007 to 2009, and the world and regional economygradually recover and stabilize The latest forecast of the economic organizations,international airlines are making quite a bright picture in future Speed of worldeconomic growth forecast at an average of around 3.1% per year for 20 years,especially Asia Pacific growth of 4.4%

Along with the recovery of world economy, world tourism has shown growth Inreturn World Tourism Organization of the United Nations (UNWTO) forecasts thatworld tourism will grow by 5.6% per year in 2020 and reach 1.6 billion visitors,compared with 880 million in 2009

Flow of tourists in the world tends to change the fundamental shift to East Asia Pacific and Southeast Asia, where economies of dynamic development, politicalpeace, stability and have more attractive tourist destination thanks to the diversity ofnature, climate and culture UNWTO forecasts in 2010, East Asia - Pacific regionwill overtake America to become the second largest region in the world afterEuropean tourists in welcoming international passengers with 22.08% and 27.34 by

-2020 % (about 438 million visitors).Tourism in South East Asian (ASEAN) plays

an important role in East Asia - Pacific region, currently accounting for 36% of

visitors and tourism income by 38% across the region In 2020, Southeast Asia willwelcomes 125 million international tourists, with an average growth rate for theperiod 2010-2020 is 6% per annum, higher than the world average.

With the strong development of economic, investment and tourism, aviation market

in Asia - Pacific region (the main market of the U.S.) has been evaluated by theAssociation of International air transport (IATA) in next years will join the MiddleEast are two areas with the highest growth rates worldwide (average 6.5% higherthan the world average is 5.0%)

Objectives are set by the Party and Government on economic and social development

is that by 2020, Vietnam will become the basic modern industry, with an averagelevel of development in the world, striving to achieve speed of GDP average growth

of 7-8% per year, GDP per capita will reach 3.000-3.200 USD, the urbanization ratewil reach 45% (30% in 2010) Investment in Vietnam continues to attract, the foreigninvestors still believe in the medium and long term future in Vietnam

Vietnamese Government has developed strategies to develop tourism in Vietnam to

2020, vision to 2030, aims to develop tourism into a spearhead economic sector in

2020, reaching the regional level in 2020, making Vietnam one of the favouritetourist destinations and international level in 2030

It is expected that by 2015, tourism will pick up the 7-8 million internationalpassengers, serve 32-35 million domestic tourists, revenue will reach 10-11 billionUSD, contribute 5.5 to 6% of GDP of the country by 2020 will be welcomed 11-12million international passengers, serving 45-48 million domestic passengers, willreach 18-19 billion USD in turnover, contribute 6.5 to 7% of the GDP in thecountry; it is expected in 2030, Vietnam will become one of the most popular touristdestinations, attracting 19-20 million international visitors and 70 million domestictourists Thus, international arrivals to Vietnam in the period 2010-2020 is forecast

to average growth of 11-12% annually until 2020 and 3-fold increase compared

with 2010 These are very convenient basis for the development of the aviationindustry in Vietnam.

However, besides the opportunities for development competition among countriestourism is increasingly fierce, while the competitive ability and experience ofVietnam's tourism sector is less challenging The major competitive tool as advancedmanagement experience, modern technology and high quality human resources are thedrawbacks of tourism in Vietnam In Southeast Asia, despite there was strongdevelopment in the past 10 years, but Vietnam is still only ranked fifth in the region,after Thailand, Singapore, Malaysia and Indonesia Thailand will plan to welcome 37million tourists in 2020 (3 times in Vietnam)

2.2.2.Legal environment

It is predicted that the traditional airlines, especially firms in East Asia andSoutheast Asia continue to maintain their strategy and improve the quality ofservices to create competitive advantage in quality for its traditions as well as makethe difference compared to other low cost airlines

The trend of fertilizer on quality and service-class fare between increasingly clear.Specifically, first-class quality services and merchants increasingly are raised withthe corresponding average revenue (yield) increasingly, while quality of commonservice class is maintained only at the necessary service level guarantee forappropriate pricing policy is very flexible and levels of average revenue is lowerthan first class and business class

Aircraft manufacturers continue to improve technology, gradually strengthen andperfect the new aircraft generation with many advantages such as lighter, fueleconomy, noise reduction, increase of flight range, reduction of cost /seats withthe new generation such as B787, A380, A350, Bombadier CSeries, MitsubishiMRJ, Sukhoi Super Jet 100

Besides the rapid development of information technology, furniture, recreationalaircraft will also have a strong influence on the development and diversification of