Introduction

Vietnam's aviation market is the seventh fastest expanding in the world. Vietnam is
anticipated to have the greatest average growth rate in Southeast Asia between 2016
and 2021, at 17.4%, compared to ASEAN's 6.1% (U.S. companies will find significant
opportunities in Vietnam’s aviation sector., 2020). One of the key factors driving this
development is the rise of low-cost airlines. A very notable business that should be
mentioned and will be discussed is Bamboo Airways.

Bamboo Airways is an FLC Group-owned airline that specializes on 5-star service and
maximizes customers' advantages via innovative goods and various services. Bamboo
Airways launched its first commercial flight on January 16th, 2019, and has since
expanded to other internal routes linking Vietnam's tourism hotspots. (About Bamboo
Airways - Bamboo Airways, n.d.)

Bamboo Airways will be a hybrid airline - a cross between a low-cost carrier and a
regular airline - which is reported to be a new form of airline not yet present in
Vietnam. Bamboo Airways' innovative model seeks to deliver affordable aviation
services of the highest quality to consumers, allowing them to enjoy the full range of
aviation services not only accessible on high-end airline.

Bamboo Airways begins its mission to soar high with its spreaded wings by
collaborating with the world's top aviation companies in order to link the tourism
areas of the S-shaped country and elevate Vietnam's image and people on the
worldwide stage.

The business's vision is focuses on being 5-star oriented. Additionally, Bamboo

Airways stresses the significance of maximizing the customer experience, ensuring
that travellers enjoy the most pleasant and secure journeys possible while flying with
this airline. Bamboo thinks that customer experience is critical to business, and its
employees agree that travel broadens perspectives, builds relationships, and
strengthens economies (Bamboo Airways and the path towards 5-star rating
achievement, n.d.)
Only ten airlines in the world have earned the worldwide 5-star rating, accounting for
around 4% of all flights. This statistic indicates the degree of effort involved in
achieving the 5-star rating that every airline strives for, even in the most established
aviation markets. Despite being a newbie in the market, Bamboo Airways has set two
initial titles on their way to 5-star rating, which are "the greatest airline for customer
service" and "the best airline for business lounges”, at least in the domestic market.
According to Eddy Doyle, Deputy General Director at Bamboo Airways, one of the
core values of this business is hospitality ("Bamboo Airways is the perfect
environment for new beginnings", 2019)

Macro environment’s effect on the business and its strategies

PESTEL framework
Political and Legal

The government’s impact on the business is undoubtedly large. Political and Legal
variables share a close connection with each other. Consumer law, safety legislation,
political stability and so on, are all taken into account when operating a business.
Bamboo Airways aims to expand their scope, not only in the domestic market but also
in the international environment. To be able to do this, they have to consider the
political system’s stability. Although Bamboo Airways is not managed by the
government, the firm still has to follow strictly to the laws, for example, customers
have to pay 10% VAT when they buy the tickets, because it is compulsory according
to the government’s rule.

Bamboo Airways inked a partnership deal with Vietnam's capital city, Hanoi, in June
2020, in the presence of the Prime Minister. The business intended to help to the
capital's tourist industry's revival, as well as to the recovery of Vietnam in general,
after the Covid-19 epidemic. According to the cooperation agreement, the two parties
would strengthen cooperation and coordinate efforts to promote tourism to
international tourist markets following the Prime Minister's approval of reopening
international routes to safe areas as announced by the National Steering Committee for
Covid-19 Prevention and Control. Bamboo Airways was committed to participate in
the Plan to Stimulate Domestic Tourism in Hanoi in 2020 for the domestic market.
Indeed, as soon as the Covid-19 crisis was brought under control in Vietnam, Bamboo
Airways deployed a series of synergistic strategies to promote domestic tourist
demand. As one of the core cities with a significant role in the domestic aviation
network, the signing of a strategic cooperation agreement with the Hanoi People's
Committee would act as a catalyst to assist Bamboo Airways in consolidating and
growing its size following the Covid-19 pandemic.

Economic

The private sector, as one of the three primary sectors that comprise the Vietnamese
economy, is thriving and playing a critical role in the current environment. According
to the Ministry of Planning and Investment's 2020 report, the private sector accounts
for 42% of GDP, contributes 30% of government income, and generates 85% of the
economy's employment. By 2030, the private sector is expected to account for 60% of
GDP. Developing new plans and orientations; capitalizing on growth and
development prospects is a critical responsibility for organizations of all sizes and
sectors. Collaborations between enterprises, in particular, are anticipated to generate
chances for the promotion of commercial activity in order to overcome the "frozen"
phase. For example, Bamboo Airways collaborating with Sacombank makes them
strategic partners in investment, production, business, service and so on, utilizing each
corporation’s strengths in relevant fields. This provides clients with the option to take
advantage of appealing deals and diverse, contemporary affiliate goods. Sacombank's
market-leading banking service system paired with Bamboo Airways' world-class
ecosystem will maximize advantages for both parties' customers and common partners
via the company's particular goods and services. integration or connection of two
ecosystems. For companies, this stage not only capitalizes on each party's capabilities,
but also creates opportunities for growing the client base, generating income via
marketing, cross-selling, and brand promotion. Simultaneously, the two sides'
collaboration will stimulate tourism and demand for banking services, laying the
groundwork for generating demand in both the tourist and financial industries. This
will provide a firm foundation for private enterprises to strive for a 60 percent share of
GDP by 2030.
Socio-cultural

According to Nguyen, M. (2022), Vietnam's urban population was roughly 36.6

million people in 2020, with a rate of urbanization of 37. By 2050, it is expected that
the urban population would outnumber the rural population. Not only does
urbanization growth develop, but so does the middle class population, which enhances
the affordability of air travel. Given the high cost of air travel, the increase in the
aforementioned data is a good indicator for the airline business, which is mostly
driven by those with average to high incomes.

As mentioned above, hospitality is a key factor to the success of not only Bamboo
Airways, but any other businesses in the service industry. In order to promote tourism
through air travel, the business organized an event to announce a tour named
“Journey of Unravelling Beauty of Nghe An”, in which four routes connecting Vinh
city with major cities, aiming at the increase of domestic flight frequency of Vinh
Airport to at least 20 round-trip flights per day. Through this event, Bamboo Airways
hoped to attract investment, strengthened the link between Nghe An and major
tourism, economic, cultural and social centres across the country, since Nghe An has
been identified as one of the key markets in Bamboo Airways’ operation strategy
(Bamboo Airways Pledges to Promote Tourism Through Air Travel - Bamboo
Airways, 2020).

Environmental

People are becoming more and more aware of environmental issue, therefore the
needs for eco-friendly product and service increases rapidly. According to the
company, Bamboo Airways will continue to eliminate throwaway plastic goods on
existing flights, including local and international routes, with the goal of decreasing
plastic waste to a minimum. According to Duong Thi Mai Hoa, Vice Chairman and
Deputy General Director of Bamboo Airways, the company is a pioneer in
environmental conservation and has long-term intentions to take real efforts against
plastic trash to safeguard the environment. The airline has substituted throwaway
plastic goods with recyclable or biodegradable materials. Plastic products are replaced
with paper cups, paper straws, and bamboo trays, among other things. Nylon bags are
replaced with biodegradable bags, meals are wrapped with parchment paper rather
than nylon food wrap, nylon blanket bags are replaced with nonwoven bags, and tools
such as bamboo straws are made of organically produced materials.

Technological

According to Bamboo Airways in 2019, they officially launched a wireless

entertainment system named Bamboo Sky on aircraft, allowing passengers to
experience the wireless entertainment system from personal devices. Passengers may
use personal devices such as computers, tablets, and cell phones to connect directly to
Bamboo Airways' accessible entertainment collection. Without using the internet,
travellers can still access over 100 interesting films, television shows, and video
games. After a few easy connecting procedures, they may listen to music based on
their preferences throughout the journey. Bamboo Airways was extremely cautious in
selecting its partners to ensure that Bamboo Sky meets the requirements for content
quality and broadcast speed, and chose to collaborate with Touch Aero and Airfi
Aero, two of the world's leading reputable providers of copyright entertainment
content and wireless broadcasting equipment. Bamboo Sky's content will be updated
and enhanced on a constant basis to better fulfil the needs of consumers.

According to British Business Group Vietnam’s report in 2019, Vietnam's aviation

sector is the fastest growing in the Asia - Pacific area, growing at an average rate of
14% between 2018 and 2023, compared to a region-wide rate of 5.5 percent.
However, domestic carriers were reported to fly 126,280 flights in 2021, down 41.7
percent year on year and roughly 60 percent from pre-pandemic levels, according to
the Civil Aviation Authority of Vietnam. Despite the huge loss in revenues, experts
say that the Vietnamese aviation industry has emerged from the depths of the crisis.
Domestic transportation will return to around 70% to 75% of pre-pandemic levels,
while foreign transportation will recover to 25% of pre-pandemic levels. The results
are projected to increase further in the last three months of this year (Việt Nam’s
aviation expected to strongly rebound this year, 2022).
Porter’s Five-Forces Framework
Threat of new entrants: low

To join the aviation business in Vietnam, large financial investment is required, as

also specific knowledge and skill on the part of its participants, which creates an
impediment. Additionally, since the aviation business benefits from economies of
scale, entry hurdles are considerable. It is found that airlines encounter significant
entrance and exit barriers as a consequence of using Porter's Five Forces (Porter
1998), demonstrating that this aspect has a sizable impact. Another barrier that should
be considered is brand value and identity. The industry now has a certain number of
brands and each of them have a considerable number of loyal customers. It is not easy
for a new face to enter the sector and expecting

Threat of substitutes: low to average

Customers in developing nations like Vietnam have the option of traveling by train or
bus, and they often choose these modes of transport owing to their low costs, which
increases the danger of replacements. However, airlines exceed all other modes of
transportation in terms of speed, convenience, and, on occasion, service. Thus, unless
new discoveries displace air travel as the least expensive and most convenient mode
of long-distance travel, the airline sector faces a low to moderate threat from
replacements.

Bargaining power of suppliers: high

The aviation industry's suppliers have considerable leverage for a variety of reasons.
To begin, the sector is controlled by two aircraft manufacturers: Boeing and Airbus.
Second, the sector is driven by aviation fuel, which accounts for about 80% of
operational costs and has a direct impact on the price of each airline ticket. Due to
high fuel costs, airlines have been compelled to reduce between 10% and 20% of
current expenditure on all products, fly more fuel-efficient aircraft, and operate on a
flexible schedule.

Bargaining power of buyers: medium

Although there are many websites, applications that help customers to find and choose
the best deal when they buy tickets, the bargaining power of consumers is considered
to be average. There are not many options when it comes to a low cost airline with
high quality standard. Bamboo Airways is a good decision if buyers want to have
great experience but with reasonable to low cost. Overall, customers’ variation of
choosing is narrow.

Industry Rivalry: high

In the past, Vietnam Airlines used to be the monopoly of airline industry. However, as
time went by, other businesses made their entrance and proved that they can be the
“threats” to Vietnam Airlines. With distinct tactics (full-service vs. low-cost), the
domestic airline business in Vietnam faces stiff competition, necessitating carriers to
maintain significant competitive advantages in order to win the game. Airline
organizations will not stop competing with each other in terms of technology,
facilities, services and so on.

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