UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ NGUYEN VAN SANG LACK OF SERVICES PROVIDING TO AIRLINE CUSTOMERS: A CASE STUDY OF VIETNAM AIRPORT GROUND SERVICES CO. LTD - TAN SON NHAT BRANCH MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City - Year 2020 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ NGUYEN VAN SANG LACK OF SERVICES PROVIDING TO AIRLINE CUSTOMERS: A CASE STUDY OF VIETNAM AIRPORT GROUND SERVICES CO. LTD - TAN SON NHAT BRANCH MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Dr. NGUYEN PHONG NGUYEN Ho Chi Minh City - Year 2020 TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENTS First of all, I would like to express my sincere thanks to UEH - International School of Business for letting me be a part of this incredible journey.
It is my great pleasure to come along with dearest lecturers and classmates at ISB. Furthermore, I am deeply indebted to my supervisor, Dr. Nguyen Phong Nguyen for his consistent support and guidance. The completion of my thesis would not have been possible without the nurturing of Dr.
Thanks should also go to my lovely former colleagues at VIAGS Tan Son Nhat for providing me valuable data and advices. Especially, I would like to extend my gratitude to my parents and my aunt for their unconditional supports and encouragement. 0 TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENT ACKNOWLEDGEMENTS. 0 TABLE OF CONTENT.
1 LIST OF TABLE. 2 LIST OF FIGURES .2 Justify the existence of the problem .4 The importance of the problem. 20 Chapter 2: Alternative solution analysis .1 Improve and enhance the quality of service: .2 Training programs for human resources and building rules. 24 Chapter 3: Action plan .2 Limitation in Action Plan.
37 1 TIEU LUAN MOI download : skknchat@gmail. 52 LIST OF TABLE Table 1: Number of passengers going from/to Tan Son Nhat Airport from 2015 to 2019. 5 Table 2: SAGS (HCM Branch) business performance ratio from 2017 to 2019. 6 Table 3: VIAGS-TSN business performance ratio from 2017 to 2019.
7 Table 4: Number of customers of VIAGS-TSN and SAGS in 2018 & 2019. 7 LIST OF FIGURES Figure 1: Preliminary cause and effect map of VIAGS-TSN. 8 Figure 2: Updated cause and effect map. 9 Figure 3: Final cause and effect map of VIAGS-TSN.
21 Figure 4: Proposed solution for VIAGS-TSN potential problem. 26 2 TIEU LUAN MOI download : skknchat@gmail.com EXECUTIVE SUMMARY Joining Sky team in June 2010 is a good step for Vietnam Airlines when it asserted its brand to the world in the context of globalization today. However, according to that, every activity of passenger service standards has been set and ensured the compliant commitment of individuals and organizations in the service supply chain for passengers. Vietnam Airport Ground Services Co., Ltd (VIAGS) was required from the Corporation to provide ground service with the criteria of “Safety - Standards - Quality - Efficiency”.
The company is committed to providing services to customers on the basis of a quality safety management system in accordance with International Standards ISO 9001:2008, ISAGO standards, and quality agreements agreed with customers. Although with 25 years of professional experience, the company’s brand is increasingly diminished. VIAGS Tan Son Nhat (VIAGS-TSN) – a branch of VIAGS is facing low sales and the reduction of customers in recent years when the customers of the company were unchanged from 2018 to 2019 while the number of customers in existing competitors were increased. There are many given different problems.
It is believed that the potential central problem is related to product quality providing to customers. The main cause is poor in planning the material supply of VIAGS-TSN. This paper will divide into main sectors, including identifying existing problems, justifying the central problem, analyzing alternative solutions, and finally giving implementation of an action plan. 1 TIEU LUAN MOI download : skknchat@gmail.com Chapter 1: Background 1.1 Company information VIAGS is the first business model in Vietnam that specializes in providing synchronous and international standard services at three major airports: Tan Son Nhat, Da Nang, and Noi Bai.
With its precursor as a ground service enterprise with 25 years of experience. The Corporation has more than 4,500 skillful staff who are professionally-trained from basic to advanced levels. The company also inherits and develops international qualifications of Safety and Quality Management System (ISO) 9001:2015 and IATA Safety Audit for Ground Operations (ISAGO) granted by IATA. The vision, mission, and core values of VIAGS in generally and VIAGS- TSN in particularly are described as following: VISION VIAGS endeavors to become one of the best ground services companies in Asia.
MISSION To provide quality aviation services in accordance with international standards meeting the ever-increasing needs of our clients through an effective corporate governance system and advanced resources. For the community: providing services with high quality for the development of the society and industry. For the airlines, customers: providing reputable, reliable and effective services. For the company members: providing a professional, dynamic and efficient work environment associated with the member’s responsibilities, rights and interests.
CORE VALUES Credibility: The highest safety index, outstanding quality services, guarantee of the reliability indicators of our services, sustained improvements of customer credibility 2 TIEU LUAN MOI download : skknchat@gmail.com are objectives that VIAGS always tries to maintain and commit to customers and airlines. Enthusiasm: Job values, professional ethics are always prioritized so that all VIAGS members are profoundly aware of duties, responsibilities, devoted to work and thoughtful towards customers. Professionalism: VIAGS is the mixture of the consolidation - outstanding characteristics in the supply chain services of each airport will be selected, inherited to synchronize towards an overall high-quality service system of VIAGS. Humanity: Human is the center of the development strategies of VIAGS – taking care of customers by emotions, understanding, and commitments; taking care of staff as a valuable asset to foster, develop, recognize the contributions fairly and humanely.
As a subsidiary of VIAGS, the main function is to provide comprehensive ground handling services in air transport lines at Tan Son Nhat International Airport. The main service of the company consists of six segments, including station management services, passenger and baggage handling services, ramp services, load control and flight operation services, cargo and mail warehouse services and executive aviation services. The biggest strength of VIAGS-TSN is that it possesses skilled and well- trained staff from basic to deep, dedicated, friendly service in specialized service in the ground service industry. VIAGS-TSN is ultimately meeting the strict standards of the international aviation industry, the regulations of airport authorities, specialization according to the specific standards of each customer airline.
Since its establishment, VIAGS-TSN has more than 1,700 employees and more than 600 ground service equipment to ensure the service of new-generation aircraft, oversized cargo, and overburden flight. VIAGS-TSN is serving more than 30 airline customers. VIAGS- TSN always tries to meet the strict requirements in the ground service of the airlines. However, there is another aspect existing in the process of strengthening the company's position.
It is showed in the SWOT analysis in the Appendix, which 3 TIEU LUAN MOI download : skknchat@gmail.com provided a clear insight into the capability of the company. From the result, it is evident that there is an inverse ratio between the business operating years and the company's sales revenue. In recent years, the image of the company gradually fades away in the eyes of customers, even a large quantity of customers had considered choosing VIAGS-TSN. The company wants to satisfy consumer trends of customers in general terms, not paying attention to unique values than rivals to make up the different feelings from customers.
Therefore, to create a good sense in the customer's mind, it requires the company to create "invisible" wealth, in which the service is a matter for the company concerned to be able to develop and enhance competitiveness competition in the market. Indeed, competition among companies today is not only on brand, price, but also the competition in terms of product quality and service. It is the issue which VIAGS-TSN company is facing when the rate of customers is reducing gradually.2 Symptoms The growth of the economy facilitates the development of the air transport industry. The income of the population increased, the development of manufacturing industries increased the solvency, time requirement becomes necessary, so the demand for air travel increased.
The air transport market has been expanding with an increase of low- cost aviation segment, and it has continued to maintain a high growth momentum (forecast that the total number of international visitors increased by 16.2%, domestic growth by 13.8%, and charter flights by 35.4% over the same period). Although with 25 years of professional experience, VIAGS-TSN has not been a popular name of customers in the ground service segment. In the context of expanding international relations, international integration has advantages. However, at the same time, it creates pressures on the company's development.
It is competition in price as well as service quality to other companies providing ground services at the airport. It is stated that in the environment of high competitive pressure, with the continuous fluctuations of the current macro-economic 4 TIEU LUAN MOI download : skknchat@gmail.com conditions, customers are the decisive factor for the existence and development of companies providing services at the airport. Each company not only focuses on reaching and attracting new customers in the market, but it is also essential to coordinate with existing customers in continuing the signing contracts as an essential strategy because creating a stable customer base is essential to ensure the business of the company to grow. The issue of maintaining and increasing the quality of service provided in order to satisfy customers has become a significant trend in the competition between the companies providing ground services at the airport.
The growth rate of the aviation industry through the years through Tan Son Nhat Airport has increased, the service output of the company is also constantly growing. Air-ground service is a reciprocal day for aviation operations. The growth of aviation operations will create a very favorable operating environment for ground service. Therefore, in recent years with the rise of aviation activities in the region, the number of passengers going to/from Tan Son Nhat airport is increasing.
Year Number of passengers 2015 26,546,475 2016 32,486,537 2017 35,906,372 2018 40,511,335 2019 41,110,896 Table 1: Number of passengers going from/to Tan Son Nhat Airport from 2015 to 2019 (Source: The Civil Aviation Administration of Vietnam – CAAV’s report) 5 TIEU LUAN MOI download : skknchat@gmail.com The more development the air-transport market is, the more newly established companies will be. Therefore the competition sharply raises. VIAGS-TSN Company has not focused on developing internal operations; it is an adverse condition for the company when airline customers choose the other brand to be served their demand, namely Saigon Ground Service (SAGS). This shortcoming means the number of customers coming to the company is not much, so to build the trust of customers becomes more difficult with VIAGS-TSN Company.
It is shown clearly in the following tables (table 2 and table 3) when the business performance ratio 2018 - 2019 of SAGS (HCM Branch) is higher more 7.5 times than VIAGS-TSN. SAGS Gross Sales Annual Growth 2017 721,651 - 2018 729,918 1.22% Table 2: SAGS (HCM Branch) business performance ratio from 2017 to 2019 (Source: SAGS financial statement of the year 2017 to 2019) The annual growth of two companies in three years is also markedly different. Although in 2017 and 2018, gross sales of SAGS was much lower than that of VIAGS TSN (18.4%), by 2019, this growth shortened very quickly, to only 5. In particular, the annual growth of VIAGS - TSN plummeted in 2018 and 2019 (1.8 times) while the annual growth of SAGS increased sharply (24.
It can be seen that there were specific weaknesses in the business strategy of VIAGS - TSN.