VietJet’s Domestic Air Travel Monopoly

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Good morning! It's Tuesday, September 19th. Today we are looking at Nguyen Thao and her company VietJet which made her Vietnam’s first self-made female billionaire!

THE FEATURE

VietJet’s Domestic Air Travel Monopoly

Nguyen Thao became Vietnam’s first female billionaire when she took her budget airline company, VietJet Air, public in 2017.

Today, VietJet is the largest airline in Vietnam and is the reason for Thao’s $2.2B net worth. Let’s figure out how she pulled it off!

What’s The Business?

At the age of 17, Thao left Vietnam to attend university in Russia. During her studies, the collapse of the Soviet Union sparked her entrepreneurial spirit. Using her connections back home, she imported supplies ranging from rubber to luxury watches into Russia.

By operating a supply line from Vietnam to Russia, Thao made her first million before she turned 21 or graduated from college.

When she returned home, she started Sovico Holdings to invest her money in real estate and banking ventures. It was only in 2011 that Thao founded VietJet– a company that would make her a billionaire and revolutionize Asian air travel.

Thao evaluated the airline market and saw the success of budget airlines like America’s Southwest and Europe’s Ryanair. Her idea was to create an affordable competitor to the government-owned Vietnam Airlines and cater to the nation’s growing middle class.

Thao’s gamble paid off, she won the loyalty of the Vietnamese middle class and was outcompeting Vietnam Airlines by 2018. In H1 of this year, VietJet generated $1.25B in revenue, amounting to an 87% increase compared to last year.

VietJet’s rapid increase in revenue comes from venturing into additional revenue streams since the start of the pandemic.

With airline transportation declining by 66% in 2020, VietJet pivoted and began using some of its passenger planes for cargo operations. In its first year, VietJet’s cargo sector delivered over 60k tons and was hailed as the “Belly carrier of the year”. As a result, VietJet was one of the few airlines to retain all employees and generate a profit in 2020.

How They Win

All publicity is good publicity

VietJet is notorious for its provocative and even salacious marketing stunts which have earned it the name “Bikini Airlines”. In addition to its annual calendar featuring airline staff in lingerie, the company faced international backlash when its bikini-clad flight attendants performed an in-flight dance for the national soccer team.

While these marketing stunts were labeled sexist, they massively increased the airline’s brand awareness in Vietnam and around the world– which was deliberate considering the recent expansion into international flights.

Breaking into an untapped market

When VietJet first started, air travel was considered an out-of-reach luxury item for the country’s middle class. To convert the public, Thao deployed an aggressive discount strategy. If a flight wasn’t full, the remaining seats would be given away at steep discounts or even for free.

With tickets priced up to 60% cheaper than Vietnam Airlines and free ticket giveaways, VietJet easily cornered the country’s domestic air travel market, and it’s looking to do the same internationally.

In the last two years, VietJet has been rapidly expanding into Asian-Pacific markets with flights to Japan, Taiwan, and Australia. Since April, there have been over 500,000 passengers on VietJet’s Vietnam-Australia route. Australians hadn’t heard of VietJet before, but the company deployed its aggressive discount strategy and quickly had Aussies hooked on free seat giveaways.