Solutions to expand the market for cargoes transport of Vietnam Airlines to 2015

PHAM QUANG MINH





SOLUTIONS TO EXPAND THE MARKET FOR CARGOES
TRANSPORT OF VIETNAM AIRLINES TO 2015




FINAL PROJECT
MASTER IN BUSINESS & MARKETING MANAGEMENT




Tutor: PHD,Nguyen Thi Lien Diep



Ho Chi Minh
2007
MINISTRY OF EDUCATION AND TRAINING UNIVERSITEU LIBRE DE BRUXELLE
HO CHI MINH CITY OPEN UNIVERSITY SOLVEY BUSINESS SCHOOL
MBMM PROGRAM
Acknowledgement of commitment

I, Pham Quang Minh, prepared and conducted this business project “Solutions To

Expand The Market For Cargoes Transport Of Vietnam Airlines To 2015”, as final
project of our MBMM1 program.

With the approval and great advices from Phd. Mrs Nguyen Thi Lien Diep and Mr
Ha Duy Quang, Deputy Operational Director Of Tan Son Nhat International Airport
Ground Handling Services (TIAGS), this project has been accomplished by myself
and served my current company as a real case.

I trust the legality of all references, information sources and materials using to
complete the project.








Acknowledgements


The author wishes to express her profound indebtedness to the courtesy
advisor of Phd. Mrs Nguyen Thi Lien Diep and for her valuable guidance,
document offer and encouragement during the course of this work. Her helpful
suggestions, supervision and comments have greatly improved the quality of this
work.
I also wish to express his faithful gratitude to Dr. Tran Anh Tuan and
Professor Jean Pierre Bayens for kindly consenting to be member of my project
examination committee.
I would like to convey my sincere thanks to Cargo Planning and Marketing

Department of Vietnam Airlines for providing the information and general support
enabling me to undertake of the Master of Marketing and Management program,
and warmest thanks to my mentor, Deputy Operational Director, Mr Ha Duy
Quang, who offered me valuable ideas for the final project.
I hope to send my thanks to the two enthusiastic coordinators of our course Mr
Serge and Ms Bao Tran who have supported us so much in relationship with the
professors of SBS and OU as well as all given us convenient materials from Open
University for this course.


ABBREVIATIONS LIST

- AFTA – International Federation of Freight Forwarder Associations
- ICAO - International Civil Aviation Organisation
- IATA - International Air Transport Association
- AAPA- Association of Asian-Pacific Airlines
- WB: World Bank
- IMF - International Monetary Funds
- CAAV - Civil Aviation Administration of Viet Nam
- VNA -Vietnam Airlines Corporation
- NAA – Northern Authority Airport
- SAA – Southern Authority Airport
- MAA – Midern Authority Airport
TABLE OF CONTENT

CHAPTER I 1
INTRODUCTION 1
1.1 Overview of Vietnam Airlines Corporation 1
1.2 Problems should be solved 2
1.3 The project’s objectives 2

1.4 Research’s method of the project 2
1.5 Application’s scope 2
CHAPTER II 3
ACTUAL SITUATION OF THE CARGO TRANSPORT OF VIETNAM
AIRLINES DURING RECENT YEARS 3
2.1 The process of establishing the cargo transport of Vietnam Airlines 3
2.2 Analysis of the internal environment related to activities of the cargo
transport of Vietnam Airlines 3
2.2.1 The internal sources, we will analyze following sources: 3
2.2.2 Operational analysis of the cargoes transport of Vietnam Airlines 5
2.3 Analysis of the external atmosphere impacts to the cargoes transport of
Vietnam Airlines 7
2.3.1 Macro environmental factor: we evaluate by 5 factors impacts to the
macro environment 7
2.3.2 Micro environmental factors 7
CHAPTER III 10
SOME SOLUTIONS TO DEVELOP THE CARGOES TRANSPORT OF
VIETNAM AIRLINES 10

3.1 Objectives of the cargo transport of Vietnam Airlines from 2007 to 2015 10
3.1.1 Prediction of the market of the cargo transport 10
3.1.2 The increase’s objectives, targets of the cargo transport of the Vietnam
Airlines Corporation to 2015 11
3.1.2.1 Objectives 11
3.1.2.2 The increase’s targets of the cargo transport of Vietnam Civil
Airlines sector 11

3.2 Some solutions 13
3.2.1 Establishment of the solutions by analyzing the matrix SWOT 13
3.2.2 According to my subjective assessment and exchanges with experts in the

airline sector, we would like to choose some solutions with the high feasibility
to expand the cargoes market of Vietnam Airlines as follows : 14

3.2.2.1 Solutions to expand the size of numbers and competence of the fleet
and cargo aircrafts to compete on the market (S2,3,4,5 + O1,2,,3,4,5,6) 17
3.2.2.2. Solutions used price’s policies of the products to increase the
competitive competence (S1,2,3,4 + T1,2,3,4) 18

3.2.2.3 Solutions to create the financial source to overcome the deficient
situations of the investment capital for the business activities of the
enterprise (W1,2,3,4,5 + T1,2,3,4) 19

3.2.2.4 Solutions to increase the service quality of transport, supporting
services, material facilities in the cargoes transport (W5 + O1,2,3,4,5,6) 20
3.2.2.5 Supporting Solutions 23
CHAPTER IV 26
CONCLUSION AND RECOMMENDATION 26
4.1 Conclusion 26
4.2 Recommendation to Vietnam Airlines 26
REFERENCES

Executive Summary:
The remarkable point of the Vietnam Civil Airline sector was established in 1956
with only 5 aircrafts. It has been operating during 51 years with plentiful events and
remarked the important event in 1996 – Vietnam Airline Corporation was
established. The business competence of VNA has been developing, enhancing to
become an international airline. In addition to trading in passenger transport, goods
transport business has been one of strong points of VNA during recent years.
After trading in transport business for a long time, VNA got some specific
achievements.

However, at the moment, as VN step by step integrates into the world economy,
opens the domestic market to receive the investment waves from foreign countries,
the need of goods transport by airlines is very high. What VNA should do to expand
the potential goods market in the future together with facing competitions with
other large airlines in the local and international area.
With the support of Associate Professor Nguyen Thi Lien Diep and Mr. Ha Duy
Quang – Vice Operating Director of TIAGS, on the basics of applying theories of
marketing in general and Business Marketing Planning in particular, together with
some available documents of VNA, the author decides to choose the project “
Solutions to expand the goods market of VNA up to 2015”; A potential field but has
not been exploited enough in recent years by Vietnam Airlines. In hope that this
project can give solutions to apply for VNA in the future to bring VNA to the new
stages up to 2015.
Let’s go the details below:
1
CHAPTER I
INTRODUCTION

1.1 Overview of Vietnam Airlines Corporation
Vietnam Airlines Corporation is the State Corporation under the model of the
Corporation 91 that was established under the Decision No. 328/TT dated May
27th, 1995 of the Prime Minister, operated under the Charter of organizing and
operating of the Corporation as approved by the Government under the Decree No.
04/CP dated January 27th, 1996. The establishment of the Corporation is to create a
strong economic corporation in the system of the State’s Enterprises, preferentially
concentrate on sources to implement economic – social missions well, to increase
the effectiveness and the international competitive performance.
The Vietnam Airlines Corporation is named Vietnam Airlines (VNA) as the core
enterprise. The Corporation has 20 member units (including 11 units of
independently entering in the accounts, 7 units of dependently entering in the

accounts, 2 enterprises); VNA’s capital is in a joint-stock company and five joint –
venture companies. Each unit has specific functions and mainly is to supply
products, services for trading airline transport. Is one of the member belonging to
the Corporation, Vietnam Airlines is the key unit, gradually strengthen and becomes
the key enterprise in the strategies of developing business of our country. Main
functions of Vietnam Airlines are to operate, trade airline transport (transport of
passengers, baggage, goods and package). Nowadays, Vietnam Airlines has been
expanding the airline networks to 28 domestic places and 38 international places at
Asia, Australia, Europe and America.
2
1.2 Problems should be solved
Now the need of transporting cargoes in general and the need of transporting by
airline is very large. However, the capacity of exploiting the cargoes transport of
Vietnam Airlines is limited during recent years. It should be privatized in the future.
1.3 The project’s objectives
To re-evaluate the operational processes of cargoes transport of Vietnam Airlines
during recent years to see the strengths, weaknesses, opportunities and threats to
propose solutions to expand the market for cargoes transport of VNA to aim at the
objectives to 2015.
1.4 Research’s method of the project
The author uses the methods of collecting material, information related to the
operations of trading cargoes transport of VNA during recent years to have
secondary information. Concurrently the author also investigates, applies the expert
methods.
1.5 Application’s scope
By evaluating, we will give these solutions to apply to VNA in the future.
Especially in the field of cargoes transport, this is the field that there are much
potential for VNA to exploit during recent years, however, VNA has not taken these
advantages.

3
CHAPTER II
ACTUAL SITUATION OF THE CARGO TRANSPORT OF
VIETNAM AIRLINES DURING RECENT YEARS
2.1 The process of establishing the cargo transport of Vietnam
Airlines
Two main business services of Vietnam Airlines are passengers and cargoes’
transport. From 1989 to 1994, Vietnam airline sector only concentrated on trading
passengers’ transport. Up to the end of 1994, the output of the cargoes transport has
been fast increasing bringing large incomes for the airline transport in Vietnam,
meanwhile the growth rate of the airline transport service has been slowly
increasing. The Management Board of Vietnam Airlines has predicted the necessity
of developing the business services of cargoes transport to the new stage, on
December 13, 1994; the General Director issued the Decision to establish the
Cargoes Marketing Board, which is the advisory board to the General Director to
manage the service business of the cargo transport for Vietnam Airlines. Now it is
called as the Cargoes Planning and Marketing Department belonging to the
commercial division of the Vietnam Airlines Corporation. (Table 13 – Appendix )
2.2 Analysis of the internal environment related to activities of the
cargo transport of Vietnam Airlines
2.2.1 The internal sources, we will analyze following sources:
+ Natural sources: with the available warehouses and equipment serving for
handling internal and external warehouse cargoes, mainly concentrating on large
airports: NBA, SGN, DAD. However, these warehouse systems are downgraded,
temporarily constructed (only a warehouse of TSC in SGN is rather modern;
Routing network of VNA was constructed by the model of “horizontal axis” mainly
4
concentrated on NBA,SGN,DAD to create advantages for VNA to compete with
other airlines in exploiting cargoes that are in and out transported to Indochina and

Asian area. However, to the area of Europe, North America, and Australia… the
exploitation performance of VNA is limited due to influences of exploitation and
strong competition of other airlines.
+ Material sources: The number of aircrafts that VNA actually owns is only 20
(4 Boeings 777, 6 Airbuses A321, 8 ATR72, 2 Fokker70) by 45 (25 aircrafts are
rent) and there are no cargo aircrafts ( Table 3 – Appendix ); Material facilities for
ensuring the exploitation, maintenance of aircrafts and equipment are mainly
concentrated on 2 enterprises of repairing aircrafts of A76 in NBA and A75 in TSN,
2 these enterprises have closed relationships with Boeing, Airbus, Fokker by
sponsorship contracts, contract of buying aircrafts…; to financial sector; the
potential of VNA is very limited in comparison to the need of investing assets to
business. Due to the ownership, capital is low, the loanable is high and the abilities
of payment the loan interest are low ( Table 6 – Appendix ). In addition, from 2005-
2006 up to now, due to influence of objective reasons: disease, war, terrorism and
especially the petroleum price is increasing… it directly impacts to the sales of
VNA.
+ Human resources: employees of VNA up to December 2006 are 10.078 (
Table 7 – Appendix ), in which the specialized employees of the airlines sector have
strict requirements of profession, foreign language… from recruitment. Every year,
staffs are trained to update new knowledge, refresh professional knowledge. It is
required to achieve certificates, degrees of VNA, IATA to continue working.
+ Management organization: The organizational model and management
structure are constructed under the on line model allow the management board on
line impact and approach to equivalent levels by on line function. However, this
structure causes to the situation that the information is slowly solved and updated;
the effectiveness, flexibility of handling and coping with extraordinary situations
are poor. ( Table 13 – Appendix )
5
2.2.2 Operational analysis of the cargoes transport of Vietnam Airlines
Analysis of the cargoes transport activities of Vietnam Airlines, we concentrate on

analyzing, assessing following factors:
+ The output of the cargoes business and the annual growth rate of VNA;
based on the Table 8 & 9 - Appendix, we see the output of the cargoes transport on
the international airlines always occupies high density during years, the market
share of VNA in exploiting the domestic cargoes always predominates (due to only
VN and BL exploit) ( Table 1 – Appendix ); moreover, the growth rate is
continuous from 2003-2006, it proves the satisfactory signals.
+ Organization and operations of the VNA marketing: The service quality is
not high, from booking the space to delivering, sending cargoes, sometimes
passengers tells the bad behavior, late delivery, prolix procedures, cargoes
defects….; the price policies are not flexible, especially the applied rate for
domestic flights (because VNA largely occupies the market share). To international
flights , VNA applies the policies are more flexible under the rule of supply and
demand to attract passengers, however VNA has to face with severe competition
from large competitors as: AF,SQ,BR,CI ; the distributive activities of VNA
during recent years have been opening the cargoes agents in the domestic market,
sign contracts with assigned agents to exploit in the foreign market together with
constructing customers’ programs regularly: priority to book spaces, ensure the
loading capacity to supply, policies of price discount…
Policies of analyzing the human resources and activities of the cargoes transport are
specified by following matrix:
Strengths (S-Strengths):
1. Advantages of exploiting the domestic cargoes.
2. The wide domestic and international network of distributing products under
agent models.
3. The high growth rate in the cargoes transport during recent years proves
VNA affirm its brand name on the market.
6
4. The wide objective market due to the Airlines network always open to other
areas in the world.

5. The quality of human resources is not high, it should be invested more to
train good management staffs, skilled cargoes staffs and technical staffs.
Weaknesses (W- Weaknesses) :
1. Financial source of Vietnam Airlines is not strong enough, it depends on the
Government, and the capital structure is not balanced.
2. Fleet is available but very small; there are no cargo aircrafts compared to
competitors.
3. Infrastructure serving for the cargoes transport is not synchronous, backward
and lack because the enterprise does not concentrate on satisfactory
investment.
4. The service quality cargoes transport is not fully paid attention to make the
customers reduce, it means that the enterprise’s competition is reduced as
well.
5. There is no satisfactory investment to research the market and marketing’s
strategy causes the enterprise is not able to accommodate to changes of the
market’s demands.
6. The organizational structure is not appropriate, it needs adjusting to be neat
to increase the flexibility and effectiveness to the enterprise.
Comments:
By assessing the internal atmosphere of the enterprise, I realize the internal source
of Vietnam Airlines is weak; VNA does not exploit the strengths and fails to
overcome its existing weaknesses in the cargoes business activities in the potential
market of the exploitation potentials.
7
2.3 Analysis of the external atmosphere impacts to the cargoes
transport of Vietnam Airlines
2.3.1 Macro environmental factor: we evaluate by 5 factors impacts to
the macro environment
+ Economic factors: Business activities of VNA during recent years are largely
influenced by changed factors of the economy: GDP, inflation rate, the scare

situation of the raw material. According to Vietnam Government, the intended rate
of economic growth and GDP in 2007 will be reached at 8% due to the increase of
the large investment and Vietnam already joined into WTO, the prospect of
increasing the needs of the cargoes transport will positively affect to VNA in the
future.
+ Social – political factors: the politics is stable, the investment environment, and
gradual completion of the laws (in December 2005, the National Assembly
modified the airline law) in the flexible direction, gradually leaves the protections.
It requires VNA to self-affirm its brand name in the future.
+ Natural, Social, Inhabitant factors: with the position as the gateway of Asian, it is
very advantage to connect airline axis to go to America, Europe, Asian areas; the
weather is advantage, the feature of VNA is to establish the airline axis of HAN-
SGN to bring large profits to VNA.
+ Technological and Scientific, Technical factors: the particular features of the
airline are to highly require the safety, convenient factors…. VNA always considers
to invest (hire, buy), upgrade equipment to have the most modern exploitation
equipment to increase the services’ quality at the highest rate.
2.3.2 Micro environmental factors
+ Competitors: at the current domestic market, VNA almost occupies the largest
rate, however, at the international market, VNA must be severely competed with
large competitors of the finance, exploited loading capacity, experience,
technology… as CI, BR, CX, SQ ( Table 2 – Appendix )
8
+ Replaced products: In the near future years, Vietnam Government has the project
to upgrade the North – Southern railway to shorten the time for the train from SGN
to HAN , in addition to investing to upgrade roads, highway 1A. All actions
threats to the market share of the cargoes transport of VNA, especially the domestic
market share.
+ Customers: mainly are agents and freight forwarding companies; these companies
distribute to 90% of the sales of the cargoes transport, direct customers (single

consignment) only occupy to 10%.
On basics of analyzing the external atmosphere to the operations of the cargo
transport of Vietnam Airlines to take out risks and challenges to the enterprise, it
gives basics to have the strategies and solutions to apply opportunities and
overcome threaten risks to the business activities of the enterprise as follows:
Opportunities (O):
1. The rate of economic growth and GDP of Vietnam achieves at the high level
(intended to increase to 8% in 2007), it helps to increase the exploited output
in the business activities of the cargo transport by airline of Vietnam
Airlines.
2. Vietnam became an official member WTO, is receiving the second
investment wave into Vietnam. The capacity of the cargoes transport by
airline largely is increased.
3. The ability of approving to increase the freight by the Government.
4. VNA is increasing the supply loading capacity on airline axis (SGNHAN,
SGNDAD, SGNHPH etc.)
5. The support from the State of the policies and finances to Vietnam Airlines
takes advantages to increase construct the market share in the objective
markets; to reduce the competitive pressure from external competitors.
6. The stability of the politics, society makes the stability of the business
policies of Vietnam Airlines.
9
7. The globalization tendency makes to increase the exploitation reserves of
cargoes among countries.
8. Application of technology, sciences into exploiting processes is the
important factor to increase the quality, economic effectiveness as well as the
competitive advantages of the products of airline transport of Vietnam
Airlines.
9. At the first stage, it uses methods to attract domestic customers in the
Vietnam market.

Threats (T):
1. The system of the airline laws are adjusted in the direction of limiting the
protection of the State to Vietnam Airlines and to issue licenses for new
airlines.
2. The globalization tendency is synonym to the increase of the potential
competitors.
3. The severe competition in the market cargo of the current international
transport as facing with competitors: China Airlines, Eva-Air and some other
airlines, which are exploiting in Vietnam.
4. The increase of the numbers and quality of other transport means that is able
to replace the airline transport in the future.


10
CHAPTER III
SOME SOLUTIONS TO DEVELOP THE CARGOES
TRANSPORT OF VIETNAM AIRLINES

3.1 Objectives of the cargo transport of Vietnam Airlines from
2007 to 2015
To establish business solutions to be suitable to the objective, actual conditions of
the market situation of the cargoes’ transport, Vietnam Airlines must concentrate on
the research, analysis of the prediction of the exploitation output, the capital
market…. Together with objectives of the enterprise, it helps to apply scientific
basics into the actual situation to choose the appropriate solutions with the general
development strategies of the Sector.
3.1.1 Prediction of the market of the cargo transport
With the advantage of the natural sources from establishment and the support from
the Government, the objective market of Vietnam Airlines is determined by the
priority of the in and out transaction cargoes to Vietnam. The international and

domestic cargoes transport in the Northern Authority Airport (NAA), Middle
Authority Airport (MAA) and the Southern Authority Airport (SAA), in which,
three international terminals are Tan Son Nhat, Da Nang and Noi Bai take the
leading roles.
From the data of the Table 12 - Appendix, It is predicted that the market cargo
transport by airlines at Vietnam market in the period of 2006-2020 suitable to “The
development strategy of Vietnam Civil Airlines Sector 2005-2010 and its direction
to 2020” shows:
- Cargoes output carried on the airline market is very large, the number is
suddenly increased due to the policies of attracting the sources of the investment
11
capitals into Vietnam by the Government and the commit to open the market of
exchanging cargoes in the AFTA, WTO ,… . It shows that the current loading
capacity of the fleet of Vietnam Airlines does not meet the increasing demands of
the cargo transport by the airlines of the market. It needs to upgrade the current fleet
and must specially pay attention to establish the cargo aircrafts to ensure the
maximum exploitation of the exchanged cargoes of the market.
- The growth rate of the international cargoes transport is evenly increased
from 2007 to 2010 with the average rate of 17,1%/year ( Table 12 – Appendix ). It
shows that this is the high rate giving the p1otential market.
3.1.2 The increase’s objectives, targets of the cargo transport of the
Vietnam Airlines Corporation to 2015
3.1.2.1 Objectives
At the Party Committee Meeting of Vietnam Airlines Corporation aiming at the
Whole National Delegate Meeting X of the Party in 2005, The Meeting gave the
development objectives, orientation for Vietnam Airlines as follows:
“ …, fast modernize, own the new technologies, concentrate on and increase the
business effectiveness, enhance the Vietnam Airlines’ position to become a large
airline to be a leading airline in the are of the service quality and business
effectiveness serving for the missions of industrialization, modernization of the

country,…”
However, due to the business sector of the current cargo transport is still weak
within the whole business activities of Vietnam Airlines, so it only gives the target:
“… concurrently establishment of the airlines, fleet to ensure the volume of the
cargo transport to reach at the sales and productivity of commercial exploitation
equivalent to the size of the average airline in the area,…”
3.1.2.2 The increase’s targets of the cargo transport of Vietnam Civil Airlines
sector
12
However, to the business sector of the cargo transport, from the analysis of the
internal environment and external environment in Chapter II together with
predicable data and objectives of Vietnam Airlines as given, we have main targets
to develop the business sector of the cargo transport of Vietnam Airlines up to 2015
as follows:
¬ To try to keep the stability of the market share of the domestic cargo
transport of Vietnam Airlines (91% as at the moment), especially as facing
with changes of opening the sky of the Government, after 2008 the market
share will keep the rate of 50 -70% of the domestic the market share.
¬ To increase the rate of the market share of the cargo transport of Vietnam
Airlines on international flights to reach at 40-50% of the market share of
the cargo transport by airlines to in and out Vietnam.
¬ To develop the fleet with the large and modern loading capacity, to invest
more to cargo aircrafts to ensure the competent of exploiting equivalent to
other size of the area airlines as Thai Airways, Eva-Air, China Airlines to
achieve the numbers and types as follows: passenger aircrafts: 47 including
24 middle - short ranges (150 seats), 10 middle ranges (250 seats), 4 middle -
far range (330 seats) and 9 far ranges (330 seats) and invest more 3 cargo
aircrafts.
¬ The cargoes output exploited must ensure to the target diagram of the output
as follows: ( Table 5 – Appendix )

¬ To increase the performance of serving the infrastructure in exploiting
cargoes and supporting services at airports: the warehouse systems for
services and cargoes storage, the specialized means system, the system of
booking network, the internal information system, the system of seeking lost
cargoes, supporting services for passengers to send and receive cargoes…
13
3.2 Some solutions
3.2.1 Establishment of the solutions by analyzing the matrix SWOT
Matrix of the weaknesses – strengths, opportunities - threats (SWOT) is the
important co-operative tool to help managers to develop four solution groups for the
enterprise as follows:
o Strength solutions - opportunities (SO)
o Strength solutions – threats (ST)
o Weakness solutions - opportunities (WO)
o Weakness solutions – threats (WT).
The co-ordination of the important internal and external factors is the most difficult
missions of the development of a matrix SWOT, it requires having good judgments
and there will not have the best combination. To establish these solutions, we base
on the matrix SWOT to have basics for giving solutions for the situations of the
business activities of the cargo transport of Vietnam Airlines.
14
3.2.2 According to my subjective assessment and exchanges with
experts in the airline sector, we would like to choose some solutions
with the high feasibility to expand the cargoes market of Vietnam
Airlines as follows :

S






W





O







OPPORTUNITIES (O)

1. The rate of economic
growth and GDP of
Vietnam reaches at
high rate.
2. Vietnam became the
official member of

WTO, is receiving the
second investment
wave, the capacity of
cargoes transport by
Vietnam market will be
increased.
3. The stability of politics
– society
4. The globalization
tendency makes the
increase of exploiting
reserves of the cargoes
among countries.
5. The application of
technology, science to
exploitation processes
is the important factor

THREATS(T)

1. The system of the
airline laws are
adjusted in the
direction of limiting the
protection of the State
to Vietnam Airlines
2. The global tendency
makes the potential
competitors increase.

3. The severe competition
in the market of the
cargo transport as
facing with
competitors.
4. The increase of
numbers and quality of
the transport types to
replace the products,
services of the cargo
transport by airlines.

15
T
to increase the quality.
6. At the first stage, it uses
methods to attract
customers of Vietnam
market

STRENGTHS (S)

1. Advantages in exploiting
domestic cargoes.
2. The distributive network of
the products under the wide
domestic and international
agent models.
3. The high growth rate in
cargoes transport, gradually

affirm its brand name on
the market
4. The objective market is
wide thanks to the system
of the airlines network that
is always expanded to areas
in the world.
5. The quality of human
resources is not high

COORDINATION OF
S/O

S
1,2,3,4,5
+ O
1,2,3,4,5,6
Solutions to uphold the
strengths of the domestic
market of the cargo
transport and open the
international market
S
2,3,4,5
+ O
1,2,3,4,5,6

Solutions to expand the
size of numbers and the
fleet’s performance and

cargo aircrafts to compete
on the market


COORDINATION OF
S/T

S
1,2,3,4,5
+ T
1,2,3,4

Solutions to select the
objective market



S
1,2,3,4,5
+ T
1,2,3,4

Solutions by using the
policies of the service,
product’s price to increase
the competitive
competence


WEAKNESSES (W)

1. Financial source of
Vietnam Airlines is not
strong enough, it largely

COMBINATION OF
W/O

W
2,3,4
+ O
5,6

Solutions to increase the

COMBINATION OF
W/T

W
1,2,3,4,5,6
+ T
1,2,3

Solutions to create
16

depends on the
Government, and the
capital structure is not
balanced.

2. The number of the fleet is
small, lack of the cargo
aircrafts compared to the
competitors.
3. The infrastructure for the
cargoes transport is not
synchronous and the
number is lack because the
enterprise is not
satisfactorily invested.
4. The service quality of the
cargoes transport is not
fully concentrated on,
making the decrease of
customers; it means that it
will reduce the
competition.
5. It does not satisfactorily
invest to the marketing
field; it does not suitable to
the market’s changes to
meet demands of sending
cargoes by customers.
6. The organizational structure
is not suitable
service quality of transport,
supporting services,
material facilities in
cargoes transport

W
5
+ O
1,3,4,5,6

Solutions to invest, upgrade
the marketing system in the
enterprise to improve the
service quality and increase
the market share of
exploiting the cargoes
transport.
financial source to
overcome the deficient
situations of investment
capital for business
activities of the
enterprise


W
1,2,3,4,5
+ T
1,2,3,4

Solutions to expand the
alliance, association with

other airlines (the
exploited routes, usage of
the fleet) and multi-
modal freight forwarding
agents.

17
3.2.2.1 Solutions to expand the size of numbers and competence of the fleet and
cargo aircrafts to compete on the market (S2,3,4,5 + O1,2,,3,4,5,6)
̇ To the domestic market, we may take advantages of the short range fleet
(ATR72, Fokker 70)/ middle range (Airbus 320, Airbus 321)/ far – middle
range (Boeing 767, Boeing 777) as currently exploited to transport passengers
to combine with carrying cargoes from and to domestic locals to save costs of
buying or hiring new planes.
̇ To the international market, due to the demands of the cargoes transport by
the airlines areas as predicted ( Table 12 - Appendix ) reach at rather high rate
together with the prediction of the demands of the cargoes transport at the
objective markets : Northeast Asia, ASEAN, EU, North America,… Vietnam
Airlines, in addition to take full advantages of the middle range and far-
middle range fleet combining between passengers and cargoes transport,
should invest to buy or hire middle/far-middle range fleet by the numbers as
required for each stage of exploiting passengers together with exploiting to
carry cargoes on such above markets ; concurrently (hire or buy) at least 3-5
middle/ far – middle range cargo aircrafts with the loading capacity from 15-
20 tons to meet carried cargo flow that is intended to increase from 2008 to
2015. the advantages of the cargo aircraft are able to carry the cargoes with
large quantity and volume and do not depend on the passenger capacity and
luggage as the current passenger airlines to help Vietnam Airlines to have
more positive before requirements of increasing the capacity of loading
capacity and size capacity to carry of the current fleet. However, the

investment to buy, hire aircrafts should carefully calculate to the seasonal
factors in business. It should rationalize the loading capacity to carry in the
low seasons to avoid the overloading capacity supply, it concurrently may hire
aircrafts in the high season.
̇ As investing to increase the number of aircrafts (hire or buy) it should pay
attention to the factors of saving fuel and range of exploiting (height as flying)
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before large changes of the market of the current petroleum price as well as
demands of saving capitals for the initial investment items of Vietnam
Airlines

3.2.2.2. Solutions used price’s policies of the products to increase the
competitive competence (S1,2,3,4 + T1,2,3,4)
̇ Vietnam Airlines is applying for following ticket’s price:
̇ Announced price: is the highest price for passengers who singly send cargoes
̇ Agent price: is applied for agents (equivalent to 90-95% the announced price)
̇ Special price: is applied for the low reasons, promotion,… of airlines (over or
equivalent to 80% of the announced price)

̇ Vietnam Airlines applies different prices for consignments with various
weight based on the basics of “ The more the consignment weight, the less the
fee ”, it helps to encourage customers to send their goods with large numbers.
̇ Price’s policies must be flexible before changes of the market and the
competitors, especially it must pay attention to the price’s policies of
competitors as Pacific Airlines, Eva-Air, China Airlines… from these basics
to adjust the price to be suitable to each stage to have the competitive price
and be able to attract customers at domestic and international markets.
̇ To have the preferential policies of the freight flexibility to large customers as
: authorized agents of Vietnam Airlines, freight forwarding agents (agent to
gather cargoes), logistics enterprises, multi-modal transport enterprises or

regular passengers who directly send cargoes,…. In the event these subjects
reach at the output as given by the targets, they will be received the more
preferential price from carriers to increase the market share and attract the
maximum cargoes before other competitors.
̇ The attached sale price is applied to exploitation routes that Vietnam Airlines
have high output (route A), it should sell with the supporting price to