Byravee Iyer
Jan 21, 2015

Low-cost airline VietJet strikes consulting deal with Google

SINGAPORE - Vietnamese low-cost carrier VietJet and Google are joining forces in an unusual deal in which the airline will be consulting the search giant to help devise digital strategy and growth plans as the company seeks to expand across North Asia and India.

Luu Duc Khanh
Luu Duc Khanh

VietJet’s managing director Luu Duc Khanh said Google would help the airline understand passenger behaviour and give it access to digital solutions that will help it tap potential customers in new markets.

“Aviation is a very competitive industry and we believe technology will give us an advantage. Google will be our advisor on many things including strategy,” he said. However, Khanh remained vague on the details of the recently signed memorandum of understanding (MOU).  

The privately run airline is a relatively new player, but a fast growing one in the aviation space. Launched in 2011, it has a fleet of 12 aircraft and operates 22 domestic and international routes. Khanh said the airline sees strong demand in the domestic market and as such plans to take a “conservative approach” to international expansion. He claimed market share has grown to 35 per cent, surpassing Jet Star to become the top low-cost carrier in the country.

Much of this growth is attributed to fleet expansion. Most recently, the company ordered 63 Airbus A320 jets and has bid for 30 more in a $9.1 billion deal. Khanh said the airline will add about six to 12 planes a year and plans to increase frequency across existing international routes including Singapore, Bangkok, Taipei, Cambodia and Korea. Spurred by success in Taipei, Khanh is keen to move into other parts of North Asia, including Japan and Korea. He also sees potential in India, Malaysia, Hong Kong, Philippines and certain cities in China.

According to Khanh, VietJet has built its brand in a cost-effective way. The company spends less than 10 per cent of its revenue on marketing and advertising. It rarely uses television and print, and all campaigns are done in-house. Instead, the airline uses a lot of digital and over-the-top PR. For instance, last year a parade of flight attendants and pilots rode horses through the streets of Da Lat to announce Vietjet's route from Ho Chi Minh City to Da Lat.

The company has run into trouble over a couple of controversial campaigns. Last year, the carrier was criticised for releasing racy pictures of lingerie models posing in its aircraft in bikinis. In 2012, a publicity stunt that saw five beauty contest winners dance along the aisle of its planes drew fines.

“Our passengers and customers are young, so our marketing strategy is focused to tap this group,” said Khanh about the campaigns. Indeed, 70 per cent of people in Vietnam are under the age of 30 and almost 80 per cent of the Vietnamese airline’s customer base is under 50.

VietJet also competes on price as the rates are often cheaper than major international airlines. When it launched in Singapore in May 2014, the company offered tickets from Singapore to Ho Chi Minh at $2. “We’ve given a new meaning to low-cost flying," Khanh said. "We brought in good aircrafts and offer really good service and this has been a game changer for us.”

 

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