INTRODUCTION

Since the birth of flight in 1903, air travel has emerged as a crucial means of transportation for
people and products. The hundred-plus years following the invention of the first aircraft have brought
about a revolution in the way people travel. The airline business is a major industry, relied upon by
millions not only for transportation but also as a way of making a living.

  In the early years, Aircraft remained experimental apparatus for five years even after the Wright
brother's first flight in December 1903. In 1908 the Wrights secured a contract to make a single aircraft
from the U.S. Army, and also licensed their patents to allow the Astra Company to manufacture aircraft in
France. Glenn Curtiss of New York began selling his own aircraft in 1909, prompting many American
aircraft hobbyists to turn entrepreneurial. Aircraft manufacturing became more and more modern and
sophisticated to meet the needs of militaries, the space industrial revolution, and customers, which drove
the structure of the industry. International travel grew rapidly, and airlines became some of the world's
largest employers. By the late 1950s, the major airlines had transitioned to Boeing or Douglas-built jet
airliners -- which carried twice as many passengers at twice the speed in greater comfort. The Boeing 747
took international air travel to a new level after its introduction in January 1970. Each nation had at least
one airline, and each airline had slightly different requirements for the aircraft they used. By the 1990s
more than thirty nations had some capacity to manufacture complete aircraft. Some made only small,
general-purpose aircraft.
         Air transport in Vietnam started with the founding of the Vietnam Civil Aviation in January 1956 by
the Vietnam People's Air Force (Ministry of Defense), upon the issuance of Decision No. 666/TTG of the
Vietnamese government that marked the birth of the Civil Aviation Industry in Vietnam. At that time, the
fleet was very small, with only 5 propeller planes IL 14, AN 2, Aero 45… The first domestic flight was
inaugurated in September 1956. The period 1976 - 1980 marked the expansion and effective exploitation
of many international routes to Asian countries such as Laos, Cambodia, China, Thailand, Philippines,
Malaysia, and Singapore. At the end of this period, Vietnamese civil aviation became a member of the
International Civil Aviation Organization (ICAO). April 1993 was the historic moment when Vietnam
Airlines (Vietnam Airlines) was officially established as a large-scale state-owned air transport business
group. On May 27, 1996, Vietnam Airlines Corporation was established on the basis of linking 20
enterprises operating in the aviation service business, taking Vietnam Airlines as the core.
Going through the process of formation and development, both the aviation industry and the airline
industry in the world and Vietnam have already had a lot of significant achievements and play an
important role in people’s life nowadays. The airline industry forms just one part of the wider aviation
industry, however, it affects the direct relationships with customers in the market, provides customers
with the ability to purchase seats on flights and travel to different parts of the world, forms a key part
of the wider travel industry. In general, an airline is a business offering air transportation services for
people or cargo that people have more concern about this industry. This is the reason why in this
research, we will focus on analyzing the market structure of airlines. To find out some of the
fundamental features of the industry, we need to answer three questions: 

1. Is the industry the commodity is in, closer to pure competition or monopoly? 

2. What are the main factors that have affected the supply and the demand of the commodity
chosen over the last years?
3. What is the role of the government?

Knowing more about the structure of the airline industry can help us figure out which of the models
will be most helpful.
TABLE OF CONTENTS

I. Market structures (Types of Market)

II. The supply and the demand
III. The government
 I. Market structure

1, Number of firms
Overview of Vietnam's airlines
Currently, Vietnam has 4 domestic airlines: Vietnam Airlines, Vietjet Air, Jetstar Pacific,
and Bamboo Airways. Vietnam's airlines operate up to 49 domestic routes to major airports in
Hanoi, Da Nang, Nha Trang, Saigon, Da Lat, and many international routes to countries in
Europe. Asia, Australia, America, Africa. In which, Vietnam Airlines operates 33 routes, Vietjet
35 routes, Bamboo Airways 24 routes, Jetstar Pacific 23 routes, and Vasco 9 routes. 
Vietnam Airlines (VNA)
Vietnam Airlines was established in 1956 and the first flight took off in September 1956.   It
is highly appreciated for its service quality, reputation and has become a companion with
attributes of many customers.
At the moment, Vietnam Airlines operates 5 lines of modern and modern decorated aircraft,
including Boeing 787, Airbus A330, Airbus A321, Airbus A350. 
Vietjet Air (VJ)
Vietjet Air was established in 2007, is an airline that provides cheap air tickets to
passengers. Currently, Vietjet Air is operating flights to all provinces and cities in the country
and internationally, with a large number of daily flights and a large number of passengers.
Vietjet Air operates modern aircraft A320 and A321, which are equipped with the most modern
equipment.
Jetstar Pacific Airlines (BL)
Jetstar Pacific Airlines was established on June 15, 1991, is a pioneering airline in providing
cheap air tickets and belongs to the group of Vietnam Airlines. Jetstar Pacific owns modern and
modern aircraft, including Boeing B737-400, Airbus A320, Boeing 787 Dreamliner, Airbus
A321, Bombardier.
Jetstar Pacific operates a network of domestic and international flights to major airports, with
5,000 weekly departures and a large passenger base. From July 26, 2020, Jetstar Pacific Airlines
officially changed its brand name back to Pacific Airlines with a completely new brand identity,
synchronized with Vietnam Airlines on all commercial functions.
Bamboo Airways (QH)
Bamboo Airways is a new airline in the Vietnam market established in 2017 managed by
FLC Group. Bamboo Airways' first flight took off on October 10, 2018, with a domestic flight.
In the coming time will open international routes. Unlike the above airlines, Bamboo Airways is
not located in Noi Bai (Hanoi) or Tan Son Nhat (Saigon), but at Phu Cat airport (Binh Dinh).
Currently, Bamboo Airways operates modern aircraft such as Airbus A321Neo, Boeing 787 – 9
Dreamliner.
Market share
Specifically 

 According to the latest data of the Civil Aviation Authority of Vietnam, in

December 2019, Vietjet accounted for 42.2% of the supply and transport market
share compared to 41.2% in January 2019.
  Vietnam Airlines holds a 33.3% market share, compared with approximately
34.5% at the beginning of the year.
 Bamboo Airways holds about 12.3% market share, 6 times higher than the 2%
achieved in January 2019. In 2020, the domestic aviation market share is expected
to have fierce competition after Bamboo Airways announced its goal of holding a
30% share. Through statistics, the average passenger growth reached 13% in
2019. That shows that the aviation market has an expansion in terms of capacity.
 The remaining Jetstar Pacific accounted for 10.6% market share and VASCO only
accounted for 1.9% market share.

=> There are 3 large firms: VN Airline, Vietjet Air, and Bamboo Airway account for 80->90%
of the market share (concentration ratios)

2, High barriers to entry into the aviation industry

a. License barrier
In Vietnam, businesses have the right to apply for the establishment of an airline and
submit documents to the local government. Then, the dossier will be submitted to the Ministry of
Planning and Investment for appraisal to report to the Prime Minister. According to the
Investment Law 2014 and the Civil Aviation Law 2006, the licensing of civil air transport
business is under the decision-making authority of the Prime Minister.

b.  The price ceiling and flooring mechanism is a barrier causing difficulties for
airlines.

This also brings some potential risks of anti-competitive behavior in the market Air
transport such as selling air service fares at low rates to eliminate competition. Currently,
competition between airlines in the market. Domestic is mainly based on the fare. Therefore,
some airlines that have economic potential can continuously reduce fares for a long time on
routes with competitors’ new competition entering the mining market. This is one of the
difficulties for new competitors to enter the market.
At the same time, if the floor price regulations are officially implemented, there will no
longer be any airlines called 'cheap'. From there, the mutual competition between airlines will be
more comprehensive in terms of products, not just at price. This feature further highlights the
"group monopoly" of Vietnam's aviation market.

c. High level of risk

Due to the nature of the air transport business, the bankruptcy of airlines is not as simple as the
bankruptcy of a normal business, it affects the economy, and at the same time, the constraints on
large asset values make it difficult for firms to more bankruptcy. These exit barriers make it
difficult for firms to leave the industry, they expect to have a profitable business, stay in the
industry longer, making the competition increase.
 d. Barriers to entry in the industry in terms of capital, technology, and input materials

 According to the revised aviation law of Vietnam, the conditions for setting up an airline:
 Having legal capital to ensure the operation of aircraft. In which, the company has 1 to 10
machines flight must have legal capital of 200 billion dongs; If you want to exploit
international routes, capital more than 500 billion VND. Foreign investors can contribute
capital to joint ventures Vietnam air transport business with a capital ratio is 49%.
 Having a professional apparatus and organizational structure for the air transport
business.
 Having a specific aircraft operation plan.
Of the above regulations, the first one can create barriers to entry industry, but this barrier is not
too high. The fundraising process does not too difficult, with the initial capital from 500 billion
to 1000 billion not too large. But it also creates an initial barrier for businesses wanting to enter
the industry.
Another concern comes from foreign airlines. With the desire to participate in exploiting
our country's aviation market, foreign airlines want to establish a domestic airline. But this is
subject to regulations government on foreign investment in the aviation market. Accordingly,
firms newly established airlines with foreign investment capital, foreign investment sources other
than holding only 49% of investment shares. To protect the domestic aviation industry, the
Government restricts joint ventures to establish airlines.
 

e.  Bargaining power of suppliers

Perhaps for the aviation industry, the pressure of suppliers is the greatest. This pressure
comes from aircraft suppliers, service lessors, ports aviation, repair, and warranty. Due to the
nature of the industry, the number of suppliers limited, they have the right to charge higher prices
than they are.
In the current aircraft supply, except for traditional aircraft, seem to have become
obsolete, there are only two suppliers of modern aircraft, high quality that is Boeing and Airbus.
Demand for these two types of aircraft in the Vietnam market is huge. These are also two aircraft
manufacturers recognized by airlines preferred, the customers of these firms are very large, the
demand is high, while the production.
Exporting aircraft cannot be quick, the quantity is not uniform, so the selling price of it is also
pushed up. Vietnamese airlines have no choice if you want to modernize their fleet to improve
competitiveness.
The second supplier is the airport, with related services. In the process of opening the door
to private carriers to enter the air transport market, The government has begun to separate port
clusters to operate independently as business services. The reason there is a price increase
because this is an exclusive service, the price is exclusive. Although these prices are negotiable
theory with customers, still pushed to the top, and airlines have to accept because there is no
other choice. In addition, airlines also endure the pressures such as fuel prices, labor supply, etc.
=> In general, the bargaining power of suppliers is very large. Many firms airlines have little
choice, not able to integrate into reverse to be able to affect suppliers.
3. Nature product
Each airline has its advantages and points in terms of service quality, folding seats as well as
promotions, ...
=>   Distinguished product categories
4. Non-price competition
Jetstar Pacific
Jetstar Pacific is a low-cost airline in Vietnam born with the mission of providing safe,
convenient, and fast transportation for Vietnamese people. With the cheapest network in the Asia
Pacific and a large number of flights and a variety of destinations, Jetstar is chosen by many
people when they want to move from one place to another. Jetstar's domestic and international
flight routes are extremely wide to meet the diverse needs of consumers. To build a brand and
introduce services to consumers, Jetstar has deployed many media campaigns, in which
advertising on taxis is one of the main channels used to spread the image of Jetstar.
Bamboo Airways
They are focused on building quality and convenience for customers. In contrast to other
domestic airlines, Bamboo Airways focuses on exploiting the niche market with short routes.
This strategy not only reduces the capacity of major airports but also partly increases the choice
for customers, building a separate direction to develop small routes of localities with tourism
potential. In addition to 3 airports in big cities such as Hanoi and Ho Chi Minh City. Ho Chi
Minh City, Da Nang, the company gives orientation to focus on several small and medium
niches such as Quy Nhon, Quang Binh, Thanh Hoa, Quang Ninh, Vinh.
Vietnam Airlines
The Communication Marketing strategy of Vietnam Airlines builds very good
communication about its brand so that the customers of Vietnam Airlines have the clearest view.
Press advertising is a tangible advertising medium targeting the business customer segment,
usually using large newspapers with a nationwide distribution such as Labor, Youth... In
addition, overseas VNA uses major newspapers in key markets: Asahi, Travel Trade…
Advertising on television is the implementation of short commercials introducing the company's
image, and at the same time increasing the frequency of broadcasting news about the company's
activities, commercial news on domestic and international news.
Internet advertising plays a huge role in the overall strategy of Vietnam Airlines today. Through
the airline's official website, in addition to the purpose of introducing products, it also helps to
provide Vietnam Airlines' target customers with information about the entire service usage
process, implementation steps, regulations, … 
VietJet Air
Cheap price is the leading pricing strategy that VietJet Air still maintains up to present
time. Based on the average income of Vietnamese people, such a pricing strategy is correct. But
to get such a "breathable" price for passengers, VietJet must also find ways to optimize costs.

 5. Interdependence
From the economic point of view, the Vietnam aviation market can now be seen as an
“oligopolistic market”. An oligopoly is defined as a market characterized by a small number of
firms ( Vietnam airline, Vietjet Air and Bamboo Airline) who realize they are interdependent in
their pricing and output policies. The number of firms is small enough to give each firm some
market power. 
In Vietnam, there will be two possible scenarios that could be followed: Collusive Oligopoly or
Non- Collusive Oligopoly. A Collusive Oligopoly is one in which the firms cooperate and not
compete, with one another concerning price and output. In that type of oligopoly, the sellers
eliminate competition by way of a formal or informal agreement, firms act as a single monopoly
to increase their collective profit and avoid “Price War” and maintain entries barrier. The price
and output decision under collusive oligopoly is mutual and interdependent. In a collusive
oligopoly, firms agree to set prices and output jointly, so they act as a single firm, which leads to
the formation of a monopoly. As collusive oligopoly leads to the creation of a monopoly,
consumers receive less benefit, as the products are offered for sale to the consumers at the same
price by all the sellers. 

Because of many obstacles to collusion, the collusive oligopoly seems hard to happen in the
Vietnam aviation industry. The major reasons could be demand and cost differences between
firms and legislative obstacles. Each firm has its segment and pursues a price and output policy
that is independent of competitors. Their target customer and service quality are also different
from each other. Therefore, it is impossible to have a common price. (Price mentioned in images
below) In addition, the Vietnam Competition Law 2014 has provisions to prevent monopolistic
alliances from surviving, for example, Article 9 stipulates the agreement on the division of the
consumption market, the source of goods supply, and the provision of services. Therefore, the
possibility of a collusive oligopoly between Vietnam Airlines, Jetstar, Vietjet Air, and Bamboo is
probably very unlikely. That means the industry tends to be closer to a non-collusive oligopoly in
which each firm has individual price and profit to maintain competition and to work
independently as a normal business.

It can be said that Vietnam Airlines have the highest price because they still focus on the
traditional market segment, have better prices, more conservative, higher income, which made up
their brand. Probably, they follow the price rigidity which is explained by the fact that an
individual firm cannot lower prices without retaliation and cannot raise prices without losing
market share. Furthermore, VNA also does not want to break the “high quality” in their brand
that the company has pursued so far. Facing the threat of low-cost airlines, VNA has policies to
maintain its crown in the market. In recent years, when facing fierce competition from Vietjet
Air, Jetstar, Bamboo Airway, there has been a clear downward trend in the average revenue of
VN Airlines. Therefore, Vietnam Airlines proposes a floor price for airfares to increase flight
efficiency. Vietnam Airlines proposes to build a floor price based on variable costs and aircraft
costs.
The specific floor price is calculated by Vietnam Airlines by distance groups, specifically as
follows:

  
They aim to control the market price as well as the market share or maybe they simply want to
be the price leader.
In conclusion, many other factors affect the airfare price such as departure time, special
occasions, or recently in COVID-19 and each firm will have its policies to deal with.
Competition among firms will be still going on unless it is not a non-collusion oligopoly
anymore. Besides, this type of oligopoly also makes the barriers to entry weaken, therefore, it
can lead to the appearance of more and more new airlines in the future.
     From the above analysis, the airline industry is closer to an oligopoly market structure, a
form of imperfect competition in which a limited number of firms dominate the industry.
Oligopoly firms have market power in setting or altering prices for their products by
establishing various output levels. Since oligopoly firms produce similar outputs and compete
with their industry rivals, any action an oligopoly firm takes is noticed by its competitors.
Consequently, rivals may react with price‐cutting or other attempts to enhance market share.
Thus, the firms in an oligopoly are interdependent, and each recognizes that its market power
is vulnerable to erosion by competitors or new market entrants. 
II. Demand and supply 
   Revenue of 3 airlines in recent years

Airlines 2018 2019 2020 2021F

Vietnam Revenue (tỷ 97.590 99.100 40.826 60.100
Airlines VNĐ)
Vietjet Air 53.577 50.603 18.210 35.000

Bamboo 1.805 4.623

Airways
 Vietnam's aviation market in 2018 continued to have stable growth, according to which, the
throughput of passengers was estimated at 106 million passengers, up 12.9% and cargo volume
was estimated at nearly 1.5 million. tons of goods increased by 7.7% compared to 2017. In 2018,
the service price increased, but it did not significantly affect the ticket price, so it can be said that
consumer demand is not affected. In 2019, Vietnam's aviation market continued to have high
growth, reaching 115.5 million passengers (including both Vietnamese and foreign airlines), an
increase of 11.8% compared to 2018, and 1.5 million tons of cargo, an increase of 11 %
compared to 2018. In 2020, COVID-19 had a deep impact on the airline industry that made it
experienced a sharp decrease in passenger volume. The number of passengers transported in
2020 reached 34.8 million passengers, a decrease of more than 31.9% compared to 2019. It can
be said that Vietnamese aviation for a year 'flying in the storm'.

From those results, it can be said that the number of

passengers and goods has fluctuated in recent years that
lead to some changes in the revenue of firms. That means
the supply and the demand have also changed.
Specifically, before the covid-19 pandemic happened,
the outlook of the aviation industry was highly
appreciated, reflecting the increasing demand of the
industry because of many factors. According to the law of
demand, lower airline ticket prices cause people to fly
more frequently. At this stage, both supply and demand
increased because of many factors, although it's the only
relative, there are exceptions. Firstly, about price factors,
it is thanks to the appearance of low-cost airlines that the
travel demand of passengers increases. Besides, non-price factors also cause the shift of the D
curve to the right. The major non-price determinants of demand in the air travel market
are:

1. Preferences of passengers. A change in passenger preferences favorable to an airline -

possibly prompted by advertising will mean that more tickets will be demanded at
each price over a particular time period, shifting the curve to the right.
2. The number of passengers. An increase in the number of passengers in a market
brought about perhaps by improvements in connecting flights or by population
growth
3. Financial status and income levels of passengers. This nonprice determinant relates to
the state of the economy and the level of such things as personal income, disposable
income, and profits (in the case of businesses). Air transportation is very sensitive to
fluctuations in the economy
4. Prices of competitors and related travel expenses. An increase in a competitor’s price,
all other things being equal, will normally prompt some passengers to switch to your
airline. This factor is called prices of related airlines, substitute airlines.
5. Passengers’ expectations with respect to future prices. Passengers’ expectations of
higher future prices may prompt them to buy now in order to beat the anticipated
 price rises.

There are some determinants of the supply curve. The first determinant is input prices.
When the cost of producing goods increases, the supply will decrease. In the airline industry, one
of the main input prices is the fuel price. As other variables are constant, when the price of fuel
increases, the number of flights per day will decrease to reduce the cost of the airline industry.
The second determinant is technology. Better technology can shift the supply curve to the right.
Technology advancement plays a very important role in the airline industry. The airline industry
is trying its best to seek better technology in fuel conservation. Besides, they also work with
airframe and engine manufacturers in designing the components of aircraft to reduce the fuel
consumption of each flight. Thus, with the improvement of technology, airlines can provide
more flights than before using the same amount of fuel. The third determinant is the weather. As
this is air transportation, weather often becomes a big issue for the airline industry. In Q1/2019,
the on-time OTP index of airlines all dropped sharply, which is attributed to weather problems as
well as technical problems of airlines. The last determinant is the expectation of future prices.
When a firm expects there is a rise in price in the future, they will supply less today until the
price of the product increase. Since the airline industry undergoes an oligopoly market, the
determinant of the number of sellers will be excluded. Other variables like taxes and subsidies
will also be excluded as they are not uncertain. It can be said that the aviation supply before the
pandemic increased by the increase in the number of aircraft. As of November 2019, the fleet of
Vietnamese airlines reached 212 ships, an increase of 44 ships compared to 2018. Although there
are many influencing factors, in general, it is still a period of stability and development for
airlines. On the contrary, from 2020 until now, the story completely changes, the main
factor here is COVID 19 that makes airlines devastated when facing up many difficulties
and challenges, has seriously affected the supply and the demand.

First and foremost, the number of passengers transported dropped sharply. The order to
restrict flights and social distancing has caused all international flights and many domestic routes
to close the tourism industry. Due to the decline in passenger transport demand, the aviation
market faces many difficulties. After recording the strongest declines of 86.5% and 87.7% in
April and May respectively due to the outbreak of the disease, it has gradually recovered thanks
to the stimulus policies in the summer tourism, but most are domestic tourists because
international flights (accounting for about 60% of total passenger turnover of airlines in 2019)
have not yet been reopened. For the whole year of 2020, the number of passengers transported
only reached 34.8 million passengers (-61.3 % YoY), of which international passengers reached
more than 3 million HK (-78.87% YoY), domestic passengers reached 31 million (-24.93%
YoY). Contrary to international visitors, domestic visitors are the main driving force in 2020 that
helped the total number of passengers transported by air to have a strong recovery.
The reasons come from: (1) The Vietnamese government has well-controlled the disease, not
allowing any infections in the community; (2) The cost of air travel is reduced when airlines
compete to operate domestic routes because they cannot operate international routes; (3) There is
no longer demand from international tourists, causing the price of tourism services to drop
sharply, promoting tourism demand of the people; (3) Unable to travel abroad, people flock to
domestic destinations. Secondly, Airlines drastically cut production. Low travel demand
seriously affects the operating capacity of airlines. In 2020, only Bamboo Airway is the only
airline with a positive flight growth rate (+40.8% YoY), mainly because it only entered the
market in January 2019 and gradually increased capacity, so it has a comparative background in
2019. Meanwhile, excluding Pacific belonging to Vietnam Airlines, which had a few changes in
the past year, VJC had the biggest decrease in the number of flights at 43.1%.

P
D S
Thirdly, the total fleet size D ’ S
of airlines decreased
slightly due to oversupply’ and low demand.
According to observations, in the period from
June to September P 2020, the peak time in
August 2020, many airlines only operated more
E
than 40% of the fleet. The excess supply, while
the demand is still low, makes many aircraft not
operated, causing additional fixed costs for
airlines. In 2020, Vietnam Airlines reduced 5
aircraft in its fleet 0to 95 aircraft,
Q whileQVietjet
Air increased only 1 aircraft, to 72 aircraft. We
Q
think that, in the condition that E’the international
E
market has not yet opened and the epidemic is
under control, airlines will only be able to exploit about 85% of their fleet on average. Finally,
competition continues to increase.

It can be seen most clearly that the pressure to reduce ticket prices has appeared before, declining
rapidly since the beginning of 2020 to stimulate travel demand, and at the same time avoid losing
passengers to other competitors. The average ticket price of airlines in April 2021 is only 55% of
the same period in 2019. If this situation continues for a long time, it will cause Vietnamese
airlines to fall into a situation of serious losses in transportation activities, deteriorate their
financial health, gradually reduce their competitiveness, especially competing with international
competitors. At the same time, threatening the sustainable development of the industry, creating
an imbalance between aviation and other transport sectors.

The airline industry is deeply impacted by the elasticity of demand that is based purely on
current market conditions, covid-19 has greatly influenced the demand for airline tickets
throughout the years. Normally, customers will often change the airline or even the destination
for a small change in the price of the ticket for another or because of events such as inflation,
terrorist attacks, and the price of oil, income…, however, the airline industry is extremely price
elastic because of indeed global public health issues.

To sum up, airlines can be up and down that depends on many factors, however, in the short
term, the prospects of the airline industry will not be very bright. The speed of recovery depends
on the policies of the Vietnamese government.

III. The role of government:

1, The main role of government in antitrust
a. Government intervention
Competition is an important part of the market economy, but the development trends of
competition often lead to oligopoly; then oligopoly again destroys the competition. To ensure
free and fair competition among business entities, the government has intervened in antitrust in
the following ways. Firstly, they enacted antitrust laws and policies. The state ownership of
monopoly is also a solution often applied to key national industries including aviation.
Currently, Vietnam is one of the fastest-growing aviation markets in the world, growing by 17.4
percent in the last decade, which was driven by a rise in domestic and foreign travelers as well as
the emergence of low-cost carriers. However, this rapid growth has started to put a strain on the
airport infrastructure. 

Consequently, The Ministry of Transport plans to spend US$15.4 billion (VND 350.5 trillion) to
develop the aviation sector by 2030, with US$3.7 billion (VND 84.4 trillion) to be invested by
2020. It plans to develop 23 airports with annual air traffic of 144 million passengers by 2020,
and 28 airports with annual air traffic of 308 million passengers by 2030.

To raise funds, the Airports Corporation of Vietnam (ACV) is planning to equitize and
implement Private-Public Partnership (PPP) projects. Moreover, some of the airports to be
developed include Long Thanh, Tan Son Nhat, Can Tho, Noi Bai, Van Don, Cat Bi, Da Nang,
and Phu Quoc. The plan also includes developing logistics centers in Noi Bai, Da Nang, and Tan
Son Nhat international airports.

Besides that, In Vietnam, the Competition Law 2014 has the provisions to prevent monopolistic
alliances from existing, for example, the provisions of Article 9 stipulates the act of agreeing to
divide the consumption market, supply goods, and provide services. 
Therefore, when Vietnam Airlines proposed floor price for airfares, Vietnam’s Ministry of
Transport has rejected a bid to set price floors on air tickets as proposed by the country’s national
carrier, Vietnam Airlines, as well as its subsidiary, Jetstar Pacific. Under the proposals, Vietnam
Airlines advocated for a floor price for domestic travel between US$68 (VND 1.5 million) and
US$185 (VND 4.2 million), while Jetstar Pacific proposed rates between US$26 (VND 600,000)
and US$53 (VND 1.2 million).
Instead of adopting the minimum rates requested by either airline, but in response to the concerns
raised by parties such as Vietnam Airlines and Jetstar Pacific, government regulators have
suggested changing the ceiling prices for airfare on external market factors such as fuel costs.
The Ministry of Transport has proposed to increase the ceiling prices for domestic routes by 7 to
16 percent to compensate for rising fuel costs.

b, Solution to improve social benefits

Along with the trend of Vietnam’s airline market in today’s world, the main way to improve
social benefits could be stimulating competition. The competition between airlines also brings
benefits to users such as improving service quality and improving customer experience.
Competition has been and will bring more benefits to society. However, it is necessary to pay
attention to create workable competition so as not to backfire.

 2, Situation of domestic and foreign aviation industry facing the COVID-19 pandemic

According to data from IATA, from the beginning of the year to now, the Covid-19 epidemic has
caused a loss of about 510 billion USD in aviation sales. It is expected that in 2020, this service
industry will lose about 118.5 billion USD and this figure in 2021 will be about 38.7 billion
USD. The prolonged Covid-19 pandemic caused many airlines around the world to declare
bankruptcy. Virgin Australia became the largest airline to collapse due to Covid-19, followed by
Latin America's second-largest airline - Avianca Holdings, which filed for bankruptcy.
 In Vietnam, data from the Civil Aviation Administration of Vietnam shows that: After many
years of continuous double-digit growth, in 2020, due to the unprecedented impact of the Covid-
19 epidemic, Vietnam's air transport market turns around. sharply decreased compared to
previous years. Through airports, the number of passengers is estimated at 66 million and 1.3
million tons of cargo, respectively, down 43.4% in passengers and 15.6% in cargo compared to
2019.

As one of the main drivers for the development of the modern world, connecting countries and
cities, the aviation industry created 87.7 million jobs in 2019, contributing 4.1% of the global
GDP. bridge. In Vietnam, the aviation industry plays a role in connecting Vietnam with countries
around the world, of which the tourism industry contributes 8.8% of the country's GDP.

 For that reason, governments around the world immediately had certain "rescue" strategies to
support airlines, according to the national vision.

Solutions

a. Cost reduction policies

By the end of 2020, governments have supported airlines with more than 200 billion USD and
continue to add about 80 billion USD to bail out the aviation industry - the industry plays a major
role in economic infrastructure. of the country.

Many specific forms of support have been implemented such as financial support (borrowing
support to pay salaries like with US airlines, loans with preferential interest rates like Garuda
Airlines,...); policy support (promotion policies to support economic recovery, tourism industry
in Japan, Korea, etc. or airport tax exemption and reduction policy, fuel tax reduction in
Thailand, Japan, and China) ); support in corporate restructuring programs, debt restructuring
and even bankruptcy protection (such as Thailand for Thai Airways, the UK for Virgin Atlantic
Airlines...).

In Vietnam, the Government's support to the aviation industry includes a policy of 50%
reduction in take-off and landing prices and flight control services for domestic flights; apply an
environmental protection tax on jet fuel equal to 70% of the prescribed tax rate, and continue to
extend it until 2021; apply policies to support enterprises to restructure loan repayment terms,
exempt and reduce loan interest and fees, remove capital difficulties, etc.

b. Loans with preferential interest rates and investment to buy shares

The request for support from the State shareholder in the role of the owner is also a solution to
maintain the operation of Vietnam Airlines in the short term. At the end of 2020, a support
solution package of VND 12 trillion was approved by the National Assembly to offset liquidity
and increase equity for Vietnam Airlines, but the disbursement of the Government's rescue
package needs to go through many procedures. According to regulations, progress is somewhat
slow. Up to now, the refinancing loan support package (VND 4,000 billion) has completed all
necessary legal corridors and is expected to be disbursed from next June. The plan to issue shares
to existing shareholders (VND 8,000 billion) is being implemented with necessary steps
according to regulations and is expected to be completed in the fourth quarter of 2021.
Summary

In the past, short and medium-term policies and solutions have been introduced by the
Government to help airlines reduce production and business costs through tax and fee reduction
programs or financial support. . But to help companies survive, develop stably and sustainably,
have enough potential to compete fairly with firms in the world, contribute to maintaining the
national image and economic development, long-term policies to solve problems need to be
implemented. Resolving issues of excess resources, fair competition and risk implications of
market instability also need to be considered by the Government.

  CONCLUSION
To summarize, an oligopoly is a market structure that is consistent with a variety of behaviors.
The only necessary condition of oligopoly is that firms are large enough to have some control
over price. Oligopolies are concentrated industries. At one extreme is the cartel, 
in which a few firms get together and jointly maximize profits—in essence, acting as a
monopolist. At the other extreme, the firms within the oligopoly vigorously compete for small,
contestable markets by moving capital quickly in response to observed profits. In between are
several alternative models, all of which emphasize the interdependence of oligopolistic firms. In
reality, specifically here is in the airline industry, it’s more complicated than theory. The airline
is a complex industry. It involves major capital requirements for aircraft, monitored by
government regulations, restrictions, and state policy, the competitive reaction from other tourist
transport, and requiring a high level of expertise to operate and manage. Airline facing increasing
globalization, rising fuel prices, heavy repair & maintenance cost, rising labor costs, increasing
competition and requirements for higher service levels, and greater flexibility. Vietnam is the
world’s seventh fastest-growing aviation market. For the period 2016-2021, Vietnam is expected
to have the highest average growth rate in Southeast Asia at 17.4 percent, compared to the 6.1
percent in ASEAN. The major drivers of this development include a growing tourism industry,
the emergence of low-cost carriers, and strong economic growth. Unless the covid-19 pandemic
had happened, airlines would have been promoted and had a positive impact on social
development, get closer to people, help them have better service experiences through the airlines'
pricing strategies. The Covid-19 pandemic is having a serious impact on world aviation, forcing
airlines to seek relief, lay off employees, and cut down the costs …Some article reported that
Vietnam Airlines expects the loss of the first quarter of 2021 will be at 4,800 billion VND, in the
first 6 months of the year, it can be up to 10,000 billion VND. Currently, the amount of overdue
debt has reached VND 6,240 billion and is in an extremely difficult situation, on the verge of
bankruptcy while commercial banks have not seen the Government's VND 12,000 billion rescue
package, so they do not for Vietnam Airlines to continue disbursing or not extending or granting
further credit limit. It’s a disaster, besides we will still face many potential difficulties as the
Covid-19 continues to be complicated and uncontrolled in the world. however, we can strongly
believe in the role of government and the efforts of airlines because at the moment Vietnam is
still a safe and dependable place and highly appreciated for its strengths and strong recovery with
the above positive signals of many positive policies. 
 REFERENCES

1. https://www.antlawyers.vn/library/vietnam-competition-law-2018-effective-jul-1st-
2019.html?fbclid=IwAR2_uB4KgzylM7XinWVbkpfvJN4J9X7F4PR4ijvJ-
9KeRDWHK5m78hLaWNg.
2. https://nhandan.vn/tin-tuc-kinh-te/ap-gia-san-ve-may-bay-khong-bao-gio-dat-loi-ich-cho-
mot-hang-hang-khong-289630?fbclid=IwAR2ize6lckfTnx-
09hPZMU13Lm5n_pWPcTaQa1XhMXB7UdmQh-VDK05JCW0
3. https://www.vietnam-briefing.com/news/vietnams-aviation-industry-continues-growth-
momentum.html/?fbclid=IwAR0b0yGje7W-8gQNtee-
Tt9F_8g8VidxOZHjjbUTYE7CgoZPCAJZbvwFA8U
4. https://www.vietnam-briefing.com/news/vietnam-government-rejects-airfare-price-floor-
proposal.html/?fbclid=IwAR1nYPlSwXtkpvYuEoSZd66zGN3Y3AKufdTrx-
X7yaaDn35-vu0olBVAxhs
5. https://www.trade.gov/market-intelligence/vietnam-aviation?
fbclid=IwAR33NEVqYKW0PGkX1z_ptQjSr_yqSi9k4NDb9TAG8ioZXdQJraAv6tN24c
4
6. https://www.gso.gov.vn/en/data-and-statistics/2020/11/increasing-domestic-market-
aviation-flourishes-in-october/?
fbclid=IwAR1aUKY_dL6yOGOKcbUOXBUrLMGL1u5FHRkBUNlYLgaaUlAA_nzIJa
uBR60
7. https://www.slideshare.net/wmughni/airline-pricing-demand?
fbclid=IwAR1LtEt6q5kb4GYK2o2frMmTnuM7Jn-
Ga0wnoeusmXPyK1PhyZw_3cI8K5Y
8. https://keydifferences.com/difference-between-collusive-oligopoly-and-non-collusive-
oligopoly.html?fbclid=IwAR2qAcInvSJJIcPbu6-rCXUUc9CpP4vx8_dWTfTu8WVr-
ZcRNBCuKxWPgf4#CollusiveModels
9. https://marketingai.admicro.vn/chien-luoc-marketing-cua-vietnam-airlines-doi-dau-voi-
cac-hang-hang-khong-gia-re/
10. https://nhandan.vn/thong-tin-doanh-nghiep/don-bay-ho-tro-tu-chinh-phu-va-tuong-lai-
hang-khong-viet-sau-dai-dich-646873/
11. https://vov.vn/kinh-te/nganh-hang-khong-mot-nam-chat-vat-vi-covid-19-kich-ban-nao-
cho-nam-2021-827384.vov