A Malaysian who’s flying high
BEING the “best low-cost airline’’ by Skytrax for 10 years in a row says a lot about the strategy deployed by AirAsia as it revolutionises the way people travel across the globe.
Where many global players have failed in the no-frills segment, this airline beat the odds, thanks to the visionary thinking of its two founding partners, Tan Sri Tony Fernandes and Datuk Kamarudin Meranun.
“Being named the World’s Best Low-Cost Airline by Skytrax for the 10th year in a row was something special – a decade of excellence,’’ Fernandes, 54, says.
But winning accolades was the furthest thing from Fernandes’ mind when he first bought over the airline for RM1 from DRB-Hicom in 2001 and it came with RM190mil in liabilities.
Since then, he has not only made flying easier but has also created much-needed competition in the marketplace, driving airfare prices down and stimulating growth in travel and tourism.
“We think we have really helped to connect Malaysia to the world. Starting with our first international route to Phuket in 2003, we now have about 90 routes spanning Asia Pacific, from Japan to India and the Middle East and everything in between,” he says.
“In doing so, we helped build Malaysia into a leading low-cost air travel hub and a destination in its own right. Last year, we carried 15.5 million international tourists on our Malaysia routes while also allowing Malaysians to travel abroad for less.”
To do all that, Fernandes and his partner had to roll up their sleeves.
“We worked hard to improve connectivity between Peninsular Malaysia and East Malaysia, and within Sabah and Sarawak. Nothing makes me happier than seeing someone who used to be able to fly back to Kota Kinabalu or Kuching from Kuala Lumpur only once a year because of the high fares, now make that trip every month or even every week.
“West Malaysians sometimes also forget there’s a whole other half of the country, and we would like to think we played a role in bringing everyone a little bit closer,’’ he said.
When Fernandes was young, owning an airline was his ambition and when the opportunity came along, he seized it.
Kamarudin was overseas at the time and after a brief phone conversation with Fernandes, the two became airline executives the industry did not take seriously, at first.
A chartered accountant by profession, Fernandes is said to have left his high-paying and highprofile job as Warner Music’s vicepresident for South-East Asia in 2001 to take over AirAsia and revive the airline, which was then a loss-making full-service carrier.
He mortgaged his house and sunk his savings into the venture, though his decision to do that drew its fair share of sceptics.
“Here we were, two guys with no airline experience starting an airline. Everyone thought we were crazy. And they weren’t wrong,’’ Fernandes says.
Timing wise, his purchase of the airline from DRB-Hicom three days before 9/11 was perfect, says a report as the terror attacks on the United States had not just devastated the airline industry, but everything that AirAsia needed to start up was suddenly half-priced.
He started by offering one-way airfares as low as RM1 and with a tagline of “Now everyone can fly”, AirAsia fast became a name in the global airline industry.
In the early days, Fernandes would slug it out himself by carrying bags to ensure that everything went on smoothly.
Today, he is more of a celebrity and some people are willing to wait for a handshake.
For a low-cost airline, cost is its biggest factor and AirAsia made sure it was among the lowest globally to ensure that it could earn as much as it can.
Fernandes, with his trademark red baseball cap and his down-to earth style of communicating, according to a report is seen as AirAsia’s most effective marketing and public relations tool.
“Personally, my biggest achievement is raising two wonderful children. Professionally, it would be building AirAsia into an Asean brand and making dreams come true for our guests and our 24,000 Allstars,” he says.
He adds that “understand the fundamentals of your business and spend time getting it right. Once you have that, you’ll be ready to take on whatever comes your way. For us, it’s all about cost, cost, cost. Our cost discipline has allowed us to weather shocks which, in the airline business, can range from oil price to pandemics to terrorism.”
From two planes in 2001, AirAsia now has a fleet of 216 of the A320 aircraft and 31 A330s. On order are 282 A320s aircraft, and 100 each of the A321 and A320.
It has been a profitable journey for AirAsia. As of the end of 2017, AirAsia made a net profit of RM1.59bil on the back of RM9.7bil revenue.
The airline group has expanded beyond borders and now has operations in Thailand, Indonesia, Philippines, and Japan. Next on its radar is operations in Vietnam and China.
Adding destinations for low-cost airlines is a norm and on the drawing boards are destinations like Brazil, Namibia and even London for consideration, though they would need longer haul planes for that.
The group carried 65.7 million passengers last year with passenger loads reaching 88%.
The journey has been not without its challenges, but the accolades and handsome profits tell a different story.
Some love him and others loathe his guts. But he is also seen, according to a report, as the “brash personality and cheerleader-like figure who gives the discount carrier its soul.’’
His advice to budding entrepreneurs is to “build your brand.” Even if you have the greatest idea in the world, if you don’t market it, no one will know. There are so many great ideas that never took off because of a lack of marketing’.’
What does Merdeka today and a “new Malaysia” mean to him and his airline?
“We hope having a new government also means a new way of doing things. Treat all companies fairly instead of favouring one over the other,” he says.
“Break down monopolies that have hobbled our ability to compete. Facilitate business, don’t be in business. So far, the signs have been positive.
“The new government has shown that it is prepared to listen to stakeholders and we hope to work closely with them to further develop Malaysia’s aviation and tourism sectors.’’