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Vietjet earning major revenue from additional services

Released at: 13:55, 19/04/2019 BUSINESS SPOTLIGHT

Vietjet earning major revenue from additional services

Photo: Vietjet Air

Revenue from additional services up 10-fold in last five years.

by Le Diem

Low-cost carrier Vietjet Air has released its audited financial statements for 2018, with strong growth recorded compared to 2017 and exceeding the annual plan, including revenue from additional services.

Net revenue stood at VND53.6 trillion ($2.3 billion) last year, an increase of 27 per cent against 2017. Revenue from aircraft sales remained unchanged, at nearly VND20 trillion ($858 million). Key growth came from air transport, which increased nearly 50 per cent to VND33.8 trillion ($1.45 million). Revenue from domestic transport increased over 22 per cent while revenue from international transport nearly doubled.

Additional services also made an important contribution to total revenue, accounting for some 25 per cent of revenue from air transport and reaching VND8.4 trillion ($360.5 billion), up 50 per cent compared to the previous year and up ten-fold over the last five years, after standing at VND836 billion ($35.9 million) in 2014. The contribution of additional service revenue from international flights was double that of domestic flights.

(Source: Vietjet Air)

(Source from Vietjet)

The growth in air transport revenue came from over 23 million passengers on 118,923 flights, up 34 per cent in passenger numbers against 2017. Vietjet used 16 new, modern, fuel-saving Airbus A321 aircraft last year, and at the same time expanded its network, including 66 international destinations.

Under the low-cost airline model, airlines usually reduce ticket prices and offer additional services such as luggage, excess baggage, seat selection, and food, etc. Vietjet’s additional service revenue will therefore more than likely grow in the future as passenger numbers continue to rise and their needs become more diversified, especially international passengers.

Vietjet is developing its international routes, which helped increase international passenger transport revenue, which was double 2017’s figure in 2018 and six-fold higher than in 2016.

As international passengers have more demand for additional services, such revenue will grow. The additional service revenue earned by airlines is generally higher in countries with higher average incomes, as people are willing to pay for accompanying services. The increase in international flights will therefore increase the average income of Vietjet’s passengers, which also increases foreign currency revenue.

The diversity and quality of additional services will also bolster revenue. Basic additional services include luggage, excess baggage, seat selection, cancellation fees, and flight change fees, as well as services provided on board. Based on different cultures and strategies, airlines can expand other services such as transporting children alone or carrying pets. Vietjet offers not only basic services but also various types of products such as hotel bookings, insurance, and financial services.

Different from other low-cost carriers, Vietjet Air provides Skyboss class tickets, with access to luxurious international lounges of five-star airlines from around the world, priority in procedures, private shuttle transport, meals, and over 30 kg of luggage. While other airlines usually offer one or two dishes and nothing on short flights, another difference on Vietjet flights is the menu of up to nine hot and fresh dishes and 30 types of drinks served by young and friendly flight attendants. Passengers can experience not only new aircraft with comfortable seats but also shop for souvenirs or duty-free goods. Confident about its passenger cabin service, the airline calls itself “Asia’s Emirates”.

(Image: Vietjet Air)

In 2018 it welcomed 23 million passengers, bringing the total number to more than 83 million, making advertising on and inside the aircraft a fertile endeavor being initially explored. It is believed to be effective for consumer brands to introduce their products to customers who directly listen, look, and read it on a two to six-hour flight.

Vietjet’s business results over the last five years prove that the company has focused on the growth of additional service revenue as a stable contributor to overall profit. This growth will continue to increase, thanks to its expanding international flight network as well as the development of various types of services and products based on customer demand.

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