The investment capital is very large while the capital capacity of the company is still small compared to the total value of exploited assets. In addition to the company's own efforts, it is necessary to have financial policy assistance from the State in the following ways:
Taken from the State budget through Government bonds, ODA, aid from foreign organizations...
The State acts as an intermediary so that the company can borrow capital through import-export credit organizations (EXIMBANK, SACE...) and waives guarantee fees for this loan.
Propose policies to facilitate the company to equitize its member companies, participate in the stock market and issue shares, and link with foreign capital markets to increase investment capital.
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Develop diplomatic relations, create conditions for VNA to cooperate with world airlines to learn management experience, expand flight routes, and attract capital.
In general, government assistance is only truly effective if businesses have financial transparency and invest effectively to avoid loss and waste of capital:
For capital from the development investment fund, VNA's depreciation fund needs to focus on projects with the ability to recover capital quickly and effectively, creating accumulation for large investment projects and programs. VNA can exploit short routes, quick turnaround or cut unnecessary costs, upgrade old airports instead of building new ones...
Boldly cooperate in joint ventures and exploitation with domestic and foreign airlines, taking advantage of partners' skills and experience to consolidate and perfect their operations.
Borrowing capital must be carefully calculated, with specific direction and plan on the ability to recover capital and repayment time, because the loan amount is often very large.
Large debt makes it difficult for the company to disburse in case of ineffective investment. Too much debt will cause loss of confidence for credit institutions when they intend to lend and the consequences can be very unpredictable.
Reduce capital imbalance, make full use of idle capital, and lend short-term capital for unused capital.
3.2.2. Solutions on state management policies:
The State must complete regulations related to air transport, fully supplement the Civil Aviation Code, sign aviation agreements with other countries that have flight cooperation to have a basis for resolving disputes whenever they arise, creating a legal corridor for VNA and other businesses to compete equally. Propose fair policies that benefit all parties, creating a premise for the strong development of the aviation industry. Build a legal basis consistent with international law, issue sub-law documents with the purpose of guiding and explaining to help airlines avoid difficulties when conducting business activities. The State plays an intermediary management role in all related issues, effectively controlling and regulating the air transport business market by coordinating supply and demand relations in the market, cargo volume, etc. Encourage airlines to introduce healthy competition, instead of reducing prices to attract customers, they should focus on some more basic issues such as: quality of service supply, safety and reliability when flying, diversifying transportation services, quickly resolving customer complaints. Prioritize prices for ground technical services such as: take-off and landing prices, airport rental prices, rental of cargo handling vehicles, fuel prices, etc., especially in the current difficult economic situation. Only then can the efficiency and quality of Vietnam's air transport industry be improved and development be sustainable.
In addition, bureaucratic administrative procedures are also a major obstacle to the development of economic activities in general and civil aviation business activities in particular. In order to create favorable conditions, the State and CAAV need to soon issue legal documents guiding relevant sectors and departments such as:
Customs, aviation security... work flexibly with airlines, helping to reduce unnecessary administrative procedures that cause inconvenience while still ensuring compliance with legal regulations. Computerizing the management system helps airlines and investors access reliable, official information sources.
3.2.3. Solutions on human resource development:
VNA aims to build a team of highly qualified, professional, experienced and enthusiastic employees. Currently, VNA's workforce is very large, but most of them do not have aviation degrees, which makes it difficult or time-consuming to develop their work. The number of pilots or technical staff is still lacking (VNA has to hire 30% foreign pilots while Indochina is 100% and Jestar Pacific is 99%), the quality is still low compared to international standards. The reasons for this are: first , the only aviation training unit in Vietnam today is the Aviation Academy, which has been in operation for 4 years, but the facilities are still limited. The pilot training center was established in 2007 and can only train about 15-20 pilots each year, which is still a modest number compared to the growth rate of the aviation industry in Vietnam. VNA even has to regularly send its pilots abroad for training. Secondly , almost all equipment and ancillary services for the industry are imported and rented from foreign partners such as Europe and Japan. Investment in training for maintenance techniques has not been focused on.
Faced with that reality, VNA needs to come up with solutions to develop its human resources:
- Provide attractive compensation policies to attract talented people, based on the principle of income linked to the labor results of each person, with appropriate compensation for key positions. The policy of selecting employees is transparent and strict, especially for those who are difficult to select and require a lot of time and training costs such as pilots, technical staff, and senior managers.
- Investing funds in training and supplementing local human resources to gradually replace foreign-hired human resources. The training program is also an important part that needs to be determined, focusing on training in weak and lacking sectors, necessary in the current period, in line with business goals such as: Training pilots to meet international standards; training aviation skills in the field of construction engineering management; operation and exploitation; training in basic aircraft techniques and improving the level of aircraft exploitation, maintenance and repair technology to serve not only themselves but also expand to serve international airlines; training staff in the fields of administration, finance, and information technology. The State and enterprises have unity, guidance and cooperation in training those who have sufficient capacity in the immediate future to meet the human resource needs of the industry, who will later become key managers.
- Establish a scholarship fund to attract excellent employees and talents with a commitment to work at VNA after graduation. Every year, VNA builds a human resource plan for the future, searches for and signs a three-party sponsorship contract between VNA - training facilities - students. In other words, this is a form of pre-ordering human resources to serve VNA's future development strategy.
- Cooperate with competent foreign partners to send their employees to improve their professional qualifications. Take advantage of ODA and FDI capital and support from international organizations to ensure investment capital needs for training.
3.2.4. International integration in air transport:
In the context of today’s deeply integrated world, a small airline will find it difficult to stand firm, let alone develop and compete with large airlines. Therefore, forming alliances and participating in many international organizations has always been VNA’s operating philosophy since its establishment. The benefits are:
- By establishing, participating in alliances and connecting routes, VNA will expand relationships and expand routes. This brings convenience to passengers.
and the economy for both VNA, passengers can use seamless air services to many places in the world with just one check-in procedure, in addition to using thousands of ticket offices and lounges with many incentives. VNA will be supplemented with flight network, shared resources to save costs, improve efficiency and increase competitiveness globally.
- Technical equipment supply alliance with companies using the same type of vehicles as VNA to help establish a shared warehouse of materials and engine equipment. Cooperate to take advantage of each other's strengths in technology, engineering, and experience.
- Attracting foreign investment capital and projects into the Vietnamese aviation market through various forms.
3.2.5. Solutions to improve service quality:
One of the current problems is the situation of flight delays and cancellations that are common at Vietnamese airlines, causing inconvenience to passengers, not only that, but also affecting the reputation and image of the airline. Therefore, this is also an issue that needs to be carefully considered. The proposed solution is:
- Enhance skills training and specialization for employees, equipping them with in-depth knowledge to master the volume of goods and quality of work within the scope of authority.
- Issue standards to limit the minimum time for performing ground services between flights and procedures for ground services before flights for each type of aircraft and each route in accordance with the actual circumstances of VNA. For example, check-in procedures, security checks, cleaning, etc. all have their own time frames according to international standards, so strict compliance is required.
- In addition to gradually improving staff capacity, it is necessary to equip monitoring and testing equipment according to standards and apply international techniques to operations and management.
3.2.6. Solutions for developing science, technology and aviation industry:
Advances in science and technology have had a strong impact on the development of the civil aviation industry. Scientific and technological achievements have created opportunities for countries that are behind in the aviation industry to catch up in providing services with international quality, improving competitiveness. Technology acquisition and transfer bring operational efficiency to young aviation industries like Vietnam when they do not have to spend too much on research, especially when Vietnam does not have a team of highly qualified engineers. However, whether the results are positive or not depends largely on the ability to master the technology of the recipient. The proposed solutions include:
- VNA needs to improve its internal aviation science and technology capacity, determine its current level and status to have a basis for receiving technologies, choose the right technologies to import and quickly master the technology. Maximally overcome cases such as: purchased equipment is old technology or too modern, not fully exploiting the features and capacity of the technology.
- Deploy research and application of scientific topics to all employees of the company, encourage the development of technological ideas. Practice finding solutions to problems arising in practice, cooperate with agencies, organizations and individuals to solve VNA's research problems.
- Build a team of qualified staff in science and technology, with reasonable treatment, long-term training, for those with real passion and capacity should sign long-term contracts.
- Develop information technology by building a master plan for the development of information technology for the airline, promoting computerization in each stage of management and operation. It is necessary to complete and integrate many important functions for VNA's e-commerce site, making it not only a useful information page about the airline's flights but also a quick communication channel with customers to help them resolve questions and book tickets quickly.
3.2.7. Investment solutions for market research:
Market factors have a great impact on businesses regardless of whether they are manufacturing or trading because this is where the products and services of the business are consumed and evaluated. The needs of customers in each place are not the same due to consumption habits or economic conditions, business must be based on careful research and market forecasting in all aspects. Sometimes we have to look at the attitudes of customers to come up with appropriate solutions. VNA has a affiliated department to do this work, in the coming time we need to invest more to help make accurate forecasts. These forecasts and assessments are very important, as a basis for best dealing with problems that will occur. There needs to be cooperation with associations, agencies, and competent organizations of Vietnam to collect relevant information to come up with specific business directions.
Innovation and quality improvement must go hand in hand with promoting the image of building the brand, creating prestige in the psychology and awareness of customers. Regularly launch discount promotions in parallel with attractive domestic tourism programs. Set up VNA sales agents in potential international tourist markets, high discount policies for agents to encourage them to sell VNA tickets instead of other airlines. Participate in booths to promote at international fairs, tourism weeks, and Vietnamese cultural weeks abroad.
3.2.8. Investment solutions for fleet and route network:
This is a measure that VNA's leadership has paid great attention to in recent times, in addition to upgrading, renovating and building new airports to serve the increasing transportation demand. For each country, investing in aircraft always accounts for a large amount of total investment capital. VNA, with its limited capital capacity, can organize aircraft leasing (including ACMI, wet leasing, dry leasing, etc.) or purchase in installments within a certain period of time (VNA will only need to mobilize initial capital equal to 15% of the total value of the aircraft and the rest will be paid in installments within 10-20%) or buy cheap used aircraft. These methods will help VNA reduce difficulties in
Having to invest a huge amount of money in buying an airplane, however, no matter what, it must ensure the following criteria:
- Good technical specifications ensure that it can be put into operation.
- Modern and convenient equipment to serve customers
- Exploitation time long enough to achieve economic efficiency.
Currently, VNA's flight network has been constantly expanding, and in the future, it will open more direct flights to some destinations in Europe to serve the travel, business and investment needs of passengers. By participating in aviation alliances and signing bilateral aviation agreements, VNA can do this well. However, in the near future, VNA should focus on developing the domestic market because the international air transport market has many potential risks and too much competition, so it is important to build a solid foundation for itself, as a springboard for development. Moreover, with the domestic market, VNA has many unique advantages that no other airline has. The Hanoi - Da Nang - Ho Chi Minh route will be fully exploited with high frequency, in addition, other separate routes to mountainous provinces will also be opened with lower frequency mainly for social purposes rather than for profit purposes, expanding routes to developing economic regions near Hanoi and Ho Chi Minh City.