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“Vietjet’s Self-Service Model: A Challenge for Competitors, as Revealed by SGN Chairman”

22 June, 2025

The Annual General Meeting of SGN was held on the morning of June 20, 2025

For 2025, SGN forecasts a revenue of 1,392 billion VND, an 11% decrease compared to 2024. However, the after-tax profit is expected to drop significantly to 159 billion VND, a 41% decline from the previous year’s results.

This downturn is mainly attributed to Vietjet‘s decision to switch to self-service ground handling at Tan Son Nhat Airport starting April 2025.

Mr. Cuong reassured shareholders regarding Vietjet‘s expansion of self-service: “Currently, Vietjet has only been granted permission to self-handle and cannot serve other airlines.”

“Vietjet is already a large and well-established airline, ranking among the top 6 in Vietnam. Their decision to self-handle is inevitable,” admitted Mr. Nguyen Cao Cuong, Chairman of the Board of Directors. “With their departure, we lost 39-40% of our revenue, and our profits took a hit of over 20%.”

However, Mr. Cuong mentioned that the airline continues to lease equipment that SAGS doesn’t fully utilize, with a three-year contract and an annual rental cost of nearly 4 billion VND. “If we consider depreciation, the company is still making a profit and not operating at a loss,” he added.

Incurring nearly 60 billion VND in personnel expenses

Vietjet’s departure not only impacted revenue but also resulted in significant personnel-related costs.

To serve Vietjet in the domestic market, SGN required over 300 employees. Following the airline’s decision to self-handle, 200 personnel were transferred to work directly for Vietjet, while SGN incurred more than 7.2 billion VND in severance and one-time allowance payments.

However, the most substantial expense didn’t come from these layoffs but from the decision to maintain the salary levels of the remaining employees. Mr. Cuong explained that after Vietjet‘s departure, the average salary of employees was expected to decrease along with the reduction in revenue (from 24 million VND/person/month to 21 million VND/person/month). Nonetheless, the management decided to uphold the previous year’s average income level of 24 million VND/person/month, resulting in an additional cost of approximately 50 billion VND. According to Chairman Cuong, this decision was largely made to “retain talented individuals.”

“In total, expenses related to salaries, bonuses, and severance packages amounted to nearly 60 billion VND. This is one of the primary reasons for the sharp decline in profits, exceeding the drop in revenue,” shared Mr. Cuong.

Actively seeking new clients

Amid these challenges, SGN has taken the initiative to seek new opportunities to compensate for the lost revenue.

A positive development is the company’s recently signed contract with United Airlines, which is expected to generate an additional 60 billion VND in annual revenue and profits ranging from 10 to 20 billion VND.

However, SGN‘s more ambitious target is Sun Phu Quoc Airways. This airline is projected to operate 30 aircraft by the end of this year, and Mr. Cuong stated: “If we secure a contract with Sun Phu Quoc Airways, we anticipate an annual revenue of 200 billion VND and substantial profits, as they are a 5-6-star airline.”

To achieve these goals, SGN has entirely transformed its approach to client acquisition. Instead of “waiting for customers to come,” the company is actively enhancing its marketing efforts and proactively reaching out to potential clients. The major markets that Mr. Cuong mentioned include China, Taiwan, and the United States.

Additionally, the company plans to expand its services, including passenger transportation within the apron, airline ticketing agency, travel agency, motor vehicle rental, etc.

Betting on Long Thanh International Airport

Despite the short-term challenges, SGN remains optimistic about its future prospects with the opening of the Long Thanh International Airport. This project is expected to accommodate up to 80% of international flights currently operating at Tan Son Nhat Airport, presenting growth opportunities for SGN.

In preparation for this new phase, Saigon – Long Thanh Ground Services Joint Stock Company (with SAGS holding 75% and HGS 25%) has officially commenced the construction project for aircraft and ground equipment maintenance services at Long Thanh.

Regarding profitability, Mr. Cuong forecasted: “According to preliminary estimates, the project in Long Thanh has an IRR of approximately 16-17%. It is expected to turn profitable by 2028.”

Vu Hao

– 08:14 21/06/2025