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 governed by the
government, the airline must rigorously adhere to the law's restrictions. For example,
consumers must pay 10% VAT when purchasing tickets, as required by the laws.

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”. There are four routes linking Vinh city
to important cities, with the goal of increasing Vinh Airport's domestic flight
frequency to at least 20 round-trip flights each day. Bamboo Airways intends to
encourage investment and build ties between Nghe An and major tourist, economic,
cultural, and social hubs around the nation via this event, since Nghe An is regarded
as a key market in Bamboo Airways' operating plan (Bamboo Airways is committed to
promoting 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. Bamboo Airways,
according to the firm itself, will continue to minimize plastic trash on existing flights,
including local and international routes, with the objective of reducing plastic waste.
According to Ms. Duong Thi Mai Hoa, Vice Chairwoman and Deputy General
Director of Bamboo Airways, the airline is a pioneer in environmental conservation
and has a long-term goal of resolving the issue of plastic waste in order to safeguard
the environment. school. The airline has eliminated single-use plastic in favor of
recyclable or biodegradable alternatives. Plastic items are being phased out in favor of
paper cups, paper straws, and bamboo trays. Plastic bags are replaced with
biodegradable bags, meals are wrapped with parchment paper rather than plastic food
wrap, nylon bags are replaced with nonwoven bags, and recycled materials are used to
create utensils such as bamboo straws. organic farming.

Technological

According to Bamboo Airways, they formally introduced their wireless entertainment

system, Bamboo Sky, on board in 2019, enabling customers to enjoy the system
through their own devices. Passengers may connect directly to Bamboo Airways'
accessible entertainment selection through personal devices such as laptops, tablets,
and smartphones. Without internet connectivity, visitors may still access over 100
films, television series, and engaging video games. They may listen to their favourite
music during the ride with a few simple connections. 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 (Vietnam’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

Suppliers to the aviation sector have substantial leverage for a variety of reasons. To
begin, the aerospace industry is dominated by two aircraft manufacturers: Boeing and
Airbus. Second, aviation fuel drives the industry, accounting for about 80% of
operational expenses and having a direct influence on individual airline pricing.
Airlines are being obliged to cut current expenditure by 10% to 20% on all goods, fly
more fuel-efficient aircraft, and operate on flexible schedules as a result of high fuel
prices.

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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