The Company's Development Orientation in the Coming Time

CHAPTER III: SOLUTIONS TO IMPROVE THE EFFECTIVENESS OF MARKETING-MIX STRATEGY FOR HHKQGVN‌‌

3.1 The company's development orientation in the coming time

3.1.1 Development orientation of civil aviation industry in the coming time

Vietnam's aviation industry has set development goals by 2020 as follows:

after:

Develop rapidly, steadily, safely and effectively in all areas of operation.

including airport system, flight management system, air transport and synchronous services, making Vietnam's aviation industry a spearhead economic sector, contributing to promoting economic development, ensuring national defense and security, integrating with the level of aviation development with countries in the region. Specifically, in the period of 2010-2020, gradually increase in-depth development under the conditions of liberalization of air transport and aviation services on the basis of improving competitiveness.

Air transport is a safe, popular and convenient means of transport; it contributes positively to the industrialization, modernization and development of the country. By 2030, Vietnam will become a country with an aviation industry that is on par with the advanced aviation industry of other countries in the region and the world.

About flight network

_ By 2020:

The flight network is mainly built according to the "hub-spoke" model with high operating frequency and good transit services at two centers, Hanoi and Ho Chi Minh City. In the flight network, for Vietnamese airlines, international routes in Northeast Asia and Southeast Asia are the main operating routes, while domestic routes and Indochina are the secondary routes.

The flight path is important, the transcontinental flight path has long-term strategic significance.

About private cargo flight network:

+Before 2015, operate cargo planes on routes to Europe, the United States, Japan, and China.

+ Develop Chu Lai airport into a regional express delivery and cargo transit center in the 2010-2020 period.

_ By 2030:

+ Strengthen and expand the international flight network, especially transcontinental flights to Hanoi, Ho Chi Minh City, Da Nang (for passenger transport), and Chu Lai (for cargo transport). Open new international flights from international airports to new destinations in Europe, North America, the Middle East, Africa and South America.

+ Continue to strengthen the domestic flight network; open new inter-regional routes, including routes not connecting to the centers of Hanoi, Ho Chi Minh City and Da Nang.

+ Focus on developing the flight network according to the multimodal transport model, ensuring balanced development and close connection between different types of transport.

About aircraft types

+ Short-range aircraft (operating flights under 4 hours): mainly operating domestic routes and Southeast Asian routes. Orientation to use aircraft from 65-100 seats ATR72 and 150-200 seats.

+ Medium-range aircraft (operating flights under 10 hours): mainly operating routes in Northeast Asia, Southeast Asia and Australia. Orientation to use aircraft from 250-350 seats (B777, B787-8, A350-800 and A330 series).

+Long-range aircraft (operating intercontinental routes): mainly operating long-range routes to Europe, North America and can be combined with cargo transport. Orientation to use types with over 300 seats (B787-9, A350-900 and A340 series).

+Cargo aircraft: use 20-30 tons to transport goods within the region; 70-100 tons to transport goods to Europe and North America. Orientation to use specialized cargo aircraft of Boeing, Airbus, Russia, Japan or equivalent.

On specific development targets

Total passenger transport market: 16% in the period 2010-2015, 14% in the period 2015-2020 and 7.5% in the period up to 2030.

Total freight market: 16% in 2010-2015, 18% in 2015-2020 and 14% in 2030.

Passenger service at airports: 15% in the period 2010-2015, 13.6% in the period 2015-2020 and 7.7% in the period up to 2030.

Cargo service at airports: 17% in the period 2010-2015, 17% in the period 2015-2020 and 14% in the period up to 2030.

Transport output of Vietnamese airlines

+2010: 15.2 million passengers and 20161 million Hk.Km; 0.25 million tons and 496 million T.km of goods.

+2015: 32.5 million passengers and 37,145 million Hk.km; 0.52 million tons and 856 million T.km of goods.

+2020: 63 million passengers and 63,725 million Hk.km; 1 million tons and 1,580 million T.km of cargo.

+2030: 132 million passengers and 125,000 million Hk.km; 3.2 million tons and 3,400 million T.km of goods.

Airport exploitation output:

2010: 32.4 million passengers and 0.62 million tons of cargo 2015: 65 million passengers and 1.4 million tons of cargo

2020: 123 million passengers and 3.1 million tons of cargo 2010: 260 million passengers and 11.5 million tons of cargo

It can be seen that the targets of the Vietnamese aviation industry are quite high. To make these targets feasible, the Civil Aviation Authority has also proposed supporting policies. These include developing existing international airports to regional standards, bringing Vietnam's air traffic management level to the advanced level in the region; perfecting technical infrastructure including satellite air navigation information networks; and creating conditions for the application of science and technology and the development of the aviation industry.

3.1.2 The company's development goals in the coming time

The company's development strategy until 2010 with a vision to 2020 :

Building VNA into a large aviation business group with strong financial potential, focusing on air transport business, while diversifying products, expanding joint ventures and partnerships in the chain of synchronous services such as technical maintenance services, ground services, and cargo to take advantage of partners' advantages and achieve high economic efficiency.

Focus on investment and development so that by 2025 VNA must become one of the leading airlines in the region, with the ability to compete well in the world market, and have its own image and identity.

Regarding service quality : Service quality meets international standards with strong national identity, meeting customer needs, competing with other airlines in the region while still maintaining the traditional image and image of the country and people of Vietnam.

Regarding the flight network : The domestic flight network together with Indochina will play a vital strategic role for the airline and at the same time have great political significance, playing an important role in serving the development of the national economy. Continue to expand, consolidate and exploit key domestic flight routes, providing convenient and suitable aviation products to meet travel needs.

as well as the people's ability to pay, serving the requirements of socio-economic development. The domestic flight network will be planned on the basis of taking 3 locations: Hanoi, Ho Chi Minh City, Da Nang as the center, from which to build a flight network across the length of the country. The international flight network is increasingly expanding to all economic centers of the continent, contributing to making Vietnam one of the international air transit centers of the region.

About the fleet : Develop a modern fleet with good technical standards, high competitiveness, amenities that meet customer needs and do not pollute the environment, gradually shortening the gap compared to other airlines in the region and the world.

Table 5: Plan for aircraft fleet development to 2020 (unit:

piece)

Year

70 seat type (F70, ATR72)	Narrow body type (A321, A320)	Wide body type (B777, B787, A350-900)	Total
2009	12	27	14	53
2010	12	31	19	62
2015	14	52	38	104
2020	17	70	63	150

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(Source: Market Planning Board)

Thus, the fleet is increasingly consolidated and increased in number, including short-range, medium-range and long-range aircraft; wide-body and narrow-body aircraft.

To realize short-term and long-term goals, overcoming existing limitations and maintaining and improving existing strengths is necessary.

The company's existing strengths are essential. We can refer to some solutions in the next section.

3.2 Solution

3.2.1 Group of solutions to improve the company's internal strength

a, Use limited capital effectively

Capital is a necessary condition for all business activities. For VNA, capital is necessary to invest in purchasing aircraft, technical equipment, upgrading human resources, transferring exploitation and maintenance technology, and maintaining competitiveness in the domestic and international markets. As analyzed above, the challenges of capital are a difficult problem that forces the airline to make reasonable adjustments.

First of all, the company must take advantage of all possibilities to develop capital sources. That is, make the most of borrowing channels through banks, export credit organizations, and other sponsors. In addition, equitization is also one of the basic measures to mobilize capital, so it is necessary to prepare all aspects to promote the equitization process of the company. According to the Government's regulations, the equitization of HHKQGVN will be in the direction of maintaining the existing state capital in the enterprise, issuing more shares to increase charter capital. The initial equity structure is that the State holds 70-80%, sells 10-20% to foreign strategic shareholders, and in the following stages, the State's shareholding ratio will gradually decrease. With the equitization, the company will have the conditions to increase its capital sources. However, this process needs to be carefully and cautiously prepared, choosing the right time to launch shares on the market. Entering the second week of April, the Vietnamese stock market has recovered after a long period of decline. The excitement has returned with an explosion in trading volume. However, in the context of an economy that has not yet recovered firmly, such fluctuations will not be sustainable in the long term. In addition, there has never been a story of equitization of an airline in Vietnam.

no country, if not careful this will bring about the opposite result expected.

When capital has been mobilized well from many different sources, the next issue that needs to be solved is to reasonably cut costs in unnecessary stages. The airline can reduce the frequency or temporarily stop operating some ineffective routes, especially routes with fierce competition caused by low-cost airlines. In the difficult global economic conditions, reduced demand leads to excess supply, continuing to maintain the market will only bring losses to the airline. In addition, to minimize costs during difficult times, the airline should delay investment in projects that are not really urgent, improve the efficiency of aircraft operations, the technical department needs to study measures to save fuel in the context of high fuel prices. At the same time, in the near future, it is not advisable to increase the workforce (except for highly skilled workers). It is possible to introduce overtime, but the reasons for the overtime must be clearly explained so that employees do not feel abused. The company needs to publicly state the current difficulties in the context of the global recession, affirm the important role of contributions from all members of the company, and that only with additional efforts can the whole company overcome these difficulties. At the same time, calculate reasonable working hours, such as working 8 hours overtime a month, which means not having a single Saturday off in a month. Thus, employees will still work their best to contribute to the company.

b, Human resource development

This is the most important job, which determines the strength of the company, because people are the central factor of all work and all policies. The company's human resources include:

_ Leaders, those who act as captains, guide and steer the ship in the right direction. Their mission does not stop at just

develop appropriate business strategies, orienting the long-term development of the company, but more importantly, they must have leadership skills and a scientific management method to unite all employees into a unified block. Because of this important role, the company needs to build a team of leaders who not only have a deep understanding of the aviation industry but also have good management skills and know how to maximize the capabilities of their employees.

_ The staff who do not directly contact customers: these are the people who work for the company in the preparation stages for product formation such as: sales staff of departments, technical experts in charge of aircraft maintenance and repair and information systems. For these people, the most important thing is to have high professional qualifications and enthusiasm for the job to carry out tasks related to their field.

_ Frontline employees, those who directly contact customers such as flight attendants, flight crew, telephone operators, office staff, agents. These are people whose image, behavior and working style will directly affect customers' feelings. Frontline employees are the face of the airline, most authentically representing what the airline wants to bring to consumers. As assessed through customer feedback channels, VNA's frontline employees are still often complained about in terms of service attitude and professional qualifications. This needs to be fixed immediately.

The company needs to train frontline staff to have a professional demeanor and an enthusiastic and caring attitude towards customers. To do so, the selection process must be thorough and the selection criteria must be improved (increasing the difficulty of the assessment tests, increasing the TOEIC score target). After careful selection, the training process can be extended (so that the staff are fully trained).

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