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AirAsia set to meet its match in Vietnam’s Vietjet (Part II)

AirAsia is entering a market where the skies are already crowded with key players, including the ambitious budget carrier Vietjet. – AirAsia đang bước vào một thị trường đã có quá đông người chơi, bao gồm cả hãng hàng không giá rẻ đầy tham vọng Vietjet.

AirAsia set to meet its match in Vietnam’s Vietjet (Part I)

[Reading level: C1 – Advanced]

Vietjet’s launch was well-timed. The carrier has benefited from the opening up of the country’s economy. Demand for air travel began rising after the country joined the World Trade Organization in 2007. Vietnam’s underdeveloped land transport has also helped: The marathon 38-hour train ride between the capital of Hanoi in the north and the commercial hub of Ho Chi Minh City in the south can be cut to a comfortable flight lasting an hour and 45 minutes.


According to the International Air Transport Association, Vietnam’s air travel sector has logged 17.4% compound annual growth over the past decade. Thao, known by her pilots as the “princess” for her meticulous appearance and style, has been credited with helping to spur that growth by making air travel affordable for ordinary Vietnamese and, in the process, breaking the national carrier’s tight hold on the market.


Thao is not afraid to copy formulas that have worked elsewhere — and in particular for AirAsia. From AirAsia’s black PVC seats and fuel-efficient narrow-body aircraft to the preordering of in-flight food, Vietjet has adapted the most successful — and sometimes the most controversialinitiatives.


For example, AirAsia is famous for its striking stewardesses clad in tight, bright uniforms, who cluster round Fernandes during high-profile promotional events. Vietjet went a step further when it used stewardesses in lingerie to promote its low cost flights — earning it the unofficial tagline, “Bikini Airline.”


Ultimately, however, the focus is on keeping costs low in order to expand the network of cut-price fares. With one of the lowest unit costs in the industry, according to the CAPA Center for Aviation, Vietjet is building market share by connecting Hanoi and Ho Chi Minh City to the country’s second-tier cities. But it still lags its bigger rival, with unit costs minus jet fuel of $0.24 in the third quarter of 2018, well above AirAsia’s $0.19.


Aggressive expansion might help to bridge that gap, as long as costs are controlled. So, unlike AirAsia — which enters new markets through strategic joint ventures — Vietjet has been adding new routes through code sharing with more established carriers, including Japan Airlines and Qatar Airways. It recently began a service between Hanoi and Osaka, and plans other long-haul routes to India, Russia and Australia, Thao told the Nikkei Asian Review in an interview last month.


VietJet Aviation CEO Nguyen Thi Phuong Thao – CEO của Vietjet bà Nguyễn Thị Phương Thảo

This policy potentially puts Thao in direct competition with Fernandes and his long-haul unit AirAsia X, which already serves some of the same routes. However, Vietjet’s expansion has not yet disturbed the plans of AirAsia X executives. “We don’t see Vietjet as a competitor for us — yet,” said Benyamin Ismail, the unit’s CEO. Malaysia Airlines is the more important rival, he said, as it focuses on the same markets in Southeast Asia, Australia, China and Japan.


For Thao, Vietjet’s next phase of development will be about becoming what she calls a “consumer airline,” selling additional goods and services — known in the industry as ancillaries — such as duty-free items and travel packages. Ancillaries accounted for 24% of the airline’s total revenue in the second quarter of this year, according to CAPA.


Vietjet is also exploring a possible tie-up with U.S. retailer Walmart to push the strategy further.


Meanwhile, AirAsia is also seeking to exploit the opportunities for add-on sales that new technology brings, with ancillaries accounting for just 19% of revenue. “I want my platform to be more than buying airline tickets,” Fernandes told the Nikkei Asian Review in an interview in November.


The airline announced in October a partnership with Google Cloud to integrate artificial intelligence into its business, aiming to be a “travel technology” company and not just a low-cost carrier. “We need to be as nimble and quick as a digital company,” said Fernandes.


Using AirAsia’s huge customer database, Fernandes plans to launch services that include parcel delivery and even online payment, going up against other tech companies. “Competition is good,” said Fernandes. “It makes me better.”


Nevertheless some analysts warn that the competition in Vietnam is now so fierce that AirAsia risks defeat a fourth time. “If anything the market has become even tougher as VietJet is now much larger and another startup, Bamboo… is presumably close to launching,” said Brendan Sobie of the Sydney-based CAPA.


Moreover, there are serious structural obstacles. It was “not realistic” to assume that the international travel market in Vietnam would continue to grow at 20% a year, given the limitations of Vietnam’s already congested airports, he added.


Still, other analysts believe there could be scope for AirAsia’s more mature model and extended network to take a share in Vietnam more quickly than in other markets. “We see Vietnam as having the ability to succeed at a much faster pace compared to the Philippines and Indonesia, supported by feeder traffic from its other AirAsia affiliates within the region,” said Ahmad Maghfur Usman, an analyst at Nomura Research.


Vietjet’s Thao is not too worried about AirAsia’s threat to her home market just yet. The economics graduate started studying the aviation business six years before getting an airline operating license in 2007. It then took her another four years of preparation to launch the first commercial flight. “It’s not easy to run an aviation business in Vietnam,” Thao reassured shareholders worrying about new competition at an annual meeting in April.


“Start it and you’ll feel the pain.”




hub /hʌb/ (n): trung tâm

log /lɒɡ/ (v): ghi nhận (một cách chính thức)

meticulous /məˈtɪk.jə.ləs/ [C2] (adj): tỉ mỉ

spur /spɜːr/ [C2] (v): thúc đẩy

affordable /əˈfɔː.də.bəl/ (adj): có giá cả phải chăng

ordinary /ˈɔː.dən.əri/ [B1] (adj): bình thường

formula /ˈfɔː.mjə.lə/ [C1] (n): công thức

adapt /əˈdæpt/ [B2] (v): áp dụng (chính sách, biện pháp)

controversial /ˌkɒn.trəˈvɜː.ʃəl/ [B2] (adj): gây tranh cãi

initiative /ɪˈnɪʃ.ə.tɪv/ [C1] (n): sáng kiến

striking /ˈstraɪ.kɪŋ/ [B2] (adj): nổi bật

stewardess /ˈstjuːədes/ (n): nữ tiếp viên

cluster /ˈklʌs.tər/ (v): túm tụm lại

high-profile /ˌhaɪˈprəʊ.faɪl/ [C2] (adj): được truyền thông chú ý

lingerie /ˈlɒn.ʒər.i/ (n): nội y

tagline /ˈtæɡlaɪn/ (n): khẩu hiệu

ultimately /ˈʌl.tɪ.mə [C2] (adv): cuối cùng, nhấn mạnh thực tế quan trọng nhất

second-tier (adj): hạng hai

cut-price /ˌkʌtˈpraɪs/ (business terms): rẻ hơn giá thị trường

lag /læɡ/ (v): thua (trên một cuộc đua)

unit cost (business terms): chi phí đơn vị

bridge the gap (idiom): thu hẹp khoảng cách

codeshare flight (business terms): chuyến bay liên danh – là chuyến bay được bán dưới danh nghĩa của một hãng hàng không nhưng lại được khai thác bằng máy bay và đội bay của một hãng hàng không khác. Ví dụ: Bạn có thể mua vé của Vietnam Airlines nhưng lại được thông báo là làm thủ tục và bay trên chuyến bay của Jetstar Pacific.

long-haul /ˈlɒŋ.hɔːl/ (adj): đường dài

ancillary /ænˈsɪl.ər.i/ (business terms): doanh thu phụ trợ

revenue /ˈrev.ən.juː/ [C1] (n): doanh thu

integrate /ˈɪn.tɪ.ɡreɪt/ [C1] (v): tích hợp

artificial intelligence /ˌɑː.tɪ.fɪʃ.əl ɪnˈtel.ɪ.dʒəns/ [C2] (n): trí tuệ nhân tạo

nimble /ˈnɪm.bəl/ (adj): lanh lợi

parcel /ˈpɑː.səl/ (n): bưu kiện

nevertheless /ˌnev.ə.ðəˈles/ [B2] (adv): tuy nhiên

fierce (adj): (cạnh tranh) khốc liệt

presumably /prɪˈzjuː.mə.bli/ [B2] (adv): có thể

obstacle /ˈɒb.stə.kəl/ [C1] (n): trở ngại

assume /əˈsjuːm/ [B2] (v): cho rằng

congested /kənˈdʒes.tɪd/ (adj): tắc nghẽn

scope /skəʊp/ [C2] (n): cơ hội

pace /peɪs/ [B2] (n): tốc độ

feeder /ˈfiː.dər/ (adj): trung chuyển

reassure /ˌriː.əˈʃɔːr/ [C1] (v): trấn an


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