The journey to a leading brand

Phuong Thao

VietJetAir aircraft are seen at Tan Son Nhat International Airport in HCMC - PHOTO: VIETJET AIR

VietJetAir achieved a development milestone when it welcomed its ten millionth passenger on January 31 last year. This landmark was even more impressive since it took the trailblazing newcomer only three years after its maiden flight in December 2011.

“Three years ago, VietJetAir’s success was just a dream, but on March 12, VietJetAir is a symbol of Vietnam’s outstanding innovation,” said Minister of Transport Dinh La Thang, at the landmark ceremony held by the carrier at Vinh International Airport.

The minister’s comment underlines the effort made by Vietnam’s only private air carrier. VietJetAir now has 21 aircraft and operates 150 flights daily on 28 domestic and international routes.

“VietJetAir has been embracing a sustainable development plan. Our expectation is everybody can fly,” said Nguyen Thanh Ha, chairwoman of VietJetAir.

As part of its effort to make it possible for everyone to fly, the carrier regularly arranges cheap or even free flights. VietJetAir last month offered steep discounts on its new Hanoi-Quy Nhon and HCMC-Dong Hoi services.

The airline gave away thousands of tickets from midday to 2:00 p.m. everyday over the course of a week. For this promotion, lucky passengers could book flights on Hanoi-Quy Nhon and HCMC-Dong Hoi routes between April and October.

VietJetAir is selling fares from VND0 exclusive of taxes and surcharges from 12 p.m. to 2 p.m. until Saturday for its Hanoi-Seoul flights. The promotional program is applicable to online purchases and flights departing between March 20 and October 31 this year.

From May 30, the carrier will run 14 fights between Vietnam and Singapore weekly, offering over 5,000 low-fare tickets to passengers every week.

However, VietJetAir is not just about low-cost options; it also has an innovative approach to company branding that helps portray VietJetAir as a dynamic and young airline through an exciting collaboration with Disney.

Besides cartoon characters on the bodies of its jetliners, the carrier is well-known for its creative in-flight entertainment programs. VietJetAir holds an award for its in-flight Cultural Creative and Entertainment Programs from the Asian Record Organization. Spend & Use Advisory magazine also picked VietJetAir as “the most friendly transportation and best promoted airline in Vietnam.”

Ambitious expansion plan

VietJetAir has achieved remarkable growth in the past three years, underlining its dynamism in Vietnam’s emerging and competitive aviation market. However, VietJetAir also aspires to become one of the largest low-cost carriers in Southeast Asia and it has already embarked on a major plan to expand business to Thailand, Taiwan, South Korea and Singapore.

The carrier is planning to follow the national flag carrier Vietnam Airlines with an initial public offering (IPO) that will allow it to enhance its competitiveness and expand its international network.

Luu Duc Khanh, managing director of VietJetAir, announced the airline’s IPO launch plan in Toulouse, France late last year when the carrier took delivery of the first Airbus A320 as part of its huge order for 100 aircraft.

“The IPO is a major step in our development strategy and also part of our plan to form an international aviation alliance,” said Khanh.

If things go as planned, VietJetAir will be the second Vietnamese airline to launch an IPO after Vietnam Airlines which sold a modest 3.48% of shares in the IPO last year.

“Each business has its own strategies and strengths to attract a unique group of investors, and VietJetAir has its own. As the first private airline in Vietnam, we are able to enjoy new opportunities for market share and growth,” he said.

Part of the strategy is international expansion, which actually has already been implemented over the last two years.

“VietJetAir has fully covered Vietnam by offering 110 flights a day and now it is actively expanding its network across the Asia-Pacific region. We have successfully established routes from Vietnam to Thailand, Singapore, South Korea, and Taiwan while preparing to open services to Cambodia, China, Russia and Japan,” said Khanh.

In its ambitious expansion plan, VietJetAir also wants to actively get involved in civil aviation infrastructure development to contribute to the development of the industry. The Ministry of Transport has recently approved a pilot scheme to sell Hall E of Terminal T1 at Noi Bai International Airport to VietJetAir though the airline wants to acquire the right to operate the entire terminal.

Not just active on the passenger transport front, the carrier has also established VietJetAir Cargo in a foray into air cargo transport in the country and abroad. With ten new A320 and A321 jets added to its fleet a year and a plan to quickly expand the international network, Do Xuan Quang, CEO of VietJetAir Cargo, said the firm’s strategy would be implemented in three stages. In the first year, VietJetAir Cargo will use its A320 fleet before hiring B737F or A330F planes to launch chartered flights in the region. After two to three years, it will mull launching long-haul flights to Europe or America using larger aircraft such as B747F thanks to cooperation with international partners.

The establishment of VietJetAir Cargo is regarded as an audacious move. VietJetAir is the first carrier in the country to win an air cargo license from the Civil Aviation Authority of Vietnam.

Recently, VietJetAir has once again proved its ambition by planning to buy 562,000 shares, or a 4% stake, in Saigon Ground Services (SAGS) under Airports Corporation of Vietnam (ACV) after its successful IPO on December 8, 2014. This was seen as the most successful IPO last year with the bidding volume 15 times bigger than offered. Besides, the average bidding price was VND44,693 per share, or 3.6 times higher than the starting price.

The 4% stake would turn VietJetAir into one of three strategic investors of SAGS along with Port Investment & Operation Joint Stock Co. (1.83 million shares, or a 13% stake) and Hoan Loc Viet Trade & Investment Joint Stock Co. (316,000 shares, or a 2.25% stake).

Given its rapid growth, VietJetAir leaders always attach importance to finding sources of capital for business expansion.

In the past three years, the carrier has cooperated with leading credit institutions in the region and elsewhere in the world to arrange capital for large aircraft purchase and maintenance contracts. This year, aside from developing international flights, VietJetAir will kick off its IPO scheme to raise funds from international investors.

In 2012, the carrier obtained around US$60 million in revenue before lifting up the figure to around US$180 million in 2013 and over US$380 million last year.

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