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GROUP ASSIGNMENT

Lecturer: Nguyen Thi Thanh Nhan

COURSE: MICROECONOMICS - ECO111

Group members: 5

1. Bui Ngoc Thanh Tuyen - SS1800712. Doan Thi Thanh Hang - SS1711703. Pham Van Linh - SS1606704. Nguyen Thi Phuong Thao - SS1800295. Nguyen Le Ngoc Linh - SS180119

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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

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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 branch at the international airport Noi Bai in Hanoi City. Vietjet was approved and licensedto 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 codeVJC.

In addition to the goal of sustainable development and a breakthrough mission in the aviationfield, VJ not only provides transportation services but also brings rich services and productsto customers through convenient technology and useful tools. It can be said that this is a newdevelopment in the global direction that VJ wants to bring to its customers. VJ also offersmany choices for customers with great and interesting experiences when using the airline'sservices. In addition, VJ is increasingly expanding its international route network, improvingservice quality, and developing a sustainable development strategy. With the possession of awide network of flights throughout Vietnam and other countries in Asia such as Singapore,Thailand, Myanmar, Malaysia, Cambodia, Laos, Japan, Taiwan, Hong Kong, China, etc., VJis increasingly asserting itself position not only in the domestic market but also in theinternational 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 DinhDistrict - Ha Noi

Tel. 028 3949 3949Fax 024-37281838

Website of the

November 2007

(Source: General introduction, VNR500, 2023)

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1.1 Total asset, total capital and total employee.

All of the resources that a company owns and can use to generate financial advantages areconsidered assets. All gross investment, cash equivalents and cash, receivables, and otherassets 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 billionVND) and exceeded 23% compared to the budget (32.720 billion VND) . Vietjet’s total assetswere around 68.037 billion VND, up roughly 8.383 billion VND from 2021 (51.654 billionVND) or 12.3%. Capital creates assets which are intrinsically tied to one another. This givesinformation 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 of53.139 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 509individuals from 2021 (5.504 people).

(Source: Annual report, Vietjet 2022)

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(Source: Annual report, Vietjet 2022)

(Source: Annual report, Vietjet 2022)

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Vietjet Air is organised with a traditional hierarchical structure. At the top of the structure isthe 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 ofManagement, Committees, Auditing and internal control, Safety-security and qualityassurance (SSQA),...

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

In addition, there are eight Vice Presidents AND Chief Accountant, A Managing Director anda Chief Executive Officer on the Board of Management. Three numbers of the supervisoryboard, together with other numbers of the board of organisation in the company, are chosenby the General Meeting of Shareholders. At 31 December 2021, Vietjet Air Company’sorganisational structure also included 2 affiliated and 9 subsidiary companies.

(Source: Annual report, Vietjet 2022)

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Vietjet Air is a primarily engaged company in the field of passenger and cargo transportationby 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 leadingairlines in applying technology to its business operations. They have been at the forefront ofimplementing electronic tickets instead of paper tickets, as well as utilising e-commerceapplications. In 2022, Vietjet continues to enhance the application of advanced technology,automation, innovation, and creativity. They aim to boost digital business in activities relatedto air transportation, cargo transportation, logistics, as well as strengthen and expand theiraviation services such as ground services, training services, financial services, projectinvestments, and other aviation services.

The core operation of Vietjet Air is air transportation, which has been the company's focussince its inception. With a new-generation airline model, Vietjet is the first airline in Vietnamto 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 andBoeing through contracts that bring significant commercial value and numerous incentives.As an aircraft leasing company, Vietjet consistently provides flight rental services to domesticand international travel agencies. Vietjet always strives to create favourable conditions andseeks investment opportunities to deliver high-quality ground services at airports, repairservices, and specialised training in air transportation.

1.4 Revenue, Cost, Profit.

The semi-annual financial report of Vietjet Aviation Joint Stock Company (HoSE: VJC) for2022, audited and verified, has revealed positive results in its business operations. Theconsolidated revenue reached 15,934.6 billion VND, an impressive 111% increase comparedto 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 downwarddue 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 companymaintained a debt-to-equity ratio of 1.09, while its current liquidity ratio reached 1.49, placingit in the group with favourable ratios within the global aviation industry. This demonstratesthe stability and effective financial management capabilities of the company.

Vietjet's business operations in the first six months of 2022 yielded positive outcomes, drivenby the strong recovery of travel demand, particularly in domestic routes, which experiencedover 30% growth compared to the pre-Covid-19 period of 2019. Specifically, Vietjetconducted nearly 33,000 flights and transported 6 million passengers, marking respectiveincreases of 135% and 200% compared to the same period in 2021. In terms of cargotransportation, the total cargo volume reached over 11,000 tons.

Vietjet has been a pioneer in opening routes between Vietnam and India, offering 17 flightroutes connecting major cities such as Hanoi, Ho Chi Minh City, Da Nang, Phu Quoc, withthe largest cities in India. The company has also reached agreements with Boeing and Airbusregarding contract restructuring, benefiting from support from manufacturers andparticipating in investment programs in Vietnam, particularly in services, training, andproduction sectors.

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2.1 Demand and supply.

Demand and supply in the context of Vietjet Air refer to the number of flights and ticketsdemanded by passengers and the availability of these flights and tickets supplied by theairline.

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

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

The equilibrium between demand and supply determines the ticket prices and the overallflight availability. If the demand exceeds supply, ticket prices may increase, and flights mightbe fully booked. Conversely, if the supply exceeds demand, ticket prices may decrease, andthere may be empty seats on flights.

Vietjet Air constantly monitors and adjusts its supply based on demand patterns to optimizeits revenue and operations. This involves strategic route planning, fleet expansion, and farepricing 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 morethan 84 billion USD, and Vietnam's airline Vietjet Air was no exception when it recorded aweighted 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 notdemand to fly due to epidemics that adversely disrupt the aviation industry, this demonstratesa severe shortage of demand compared to supply. To increase tourism demand when theepidemic ended, there was a shortage of aircraft services because more people needed to getaround. Recognizing this, Vietjet Air has taken measures to make it simpler for customers toreach them, including opening more domestic and international routes, providing programsfor finding cheap tickets for 0 VND, and lowering airplane prices so that they are affordablefor 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 airlinegenerated 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 withVietjet Air on both domestic and international routes. It offers a wide range of destinations

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

Thai AirAsia: As the Thai subsidiary of AirAsia, Thai AirAsia competes with Vietjet Air notonly in Thailand but also in the broader Southeast Asian market. It caters to both domesticand 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 SoutheastAsia. It offers a comprehensive network of domestic and international flights, providingcompetition to Vietjet Air in terms of destination coverage and pricing.

Jetstar Pacific: Jetstar Pacific, formerly known as Pacific Airlines, is a Vietnamese low-costcarrier partly owned by Vietnam Airlines and Qantas Airways. It operates domestically withinVietnam 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 airlinesdominate 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 ofdominant firms in this market results in high competition and interdependence. Any strategicdecision made by Vietjet Air can potentially affect its competitors, and vice versa. Thisinterdependence often leads to careful consideration of competitors' reactions when makingbusiness 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 itsunique offerings and marketing campaigns. Non-price competition allows Vietjet Air toposition itself as a low-cost carrier with a distinct identity in the market. However, theoligopolistic nature of the market also means that there are barriers to entry for potentialcompetitors. Establishing a strong airline presence, including obtaining necessary licenses andacquiring aircraft, can pose significant challenges that deter new entrants from entering themarket.

V. Strategies and applications.

A key strategy of Vietjet Air is its low-cost carrier (LCC) business model, which involvesminimizing costs at every stage of operations. By operating as a low-cost carrier, Vietjet Aircan 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 withinVietnam and other countries in the region. This strategy allows Vietjet Air to provide a widerange of travel options to its customers, cater to both leisure and business travelers, tap intonew markets, boost passenger numbers, and maintain a competitive edge against competitors.Vietjet Air applies vibrant branding and marketing efforts to raise brand awareness and attractcustomers. By collaborating with celebrities, using creative advertisements, and organizingpromotional events, Vietjet Air creates a strong brand image that resonates with its targetaudience, helping the airline stand out in a competitive market.

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

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

VI. Conclusion

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

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