Riad hopes for greater clarity and freedom to do business
from the interview with AirAsia Bhd chief executive officer (CEO) Riad Asmat.
Q: How did you feel when you were named as the new CEO of AirAsia?
A: Twenty years ago, I didn’t think I was going to run an airline, to be honest. But when I was given the opportunity, it really didn’t sink in until January 10, when I showed up for my first day. I realised then that I was actually going to run an airline.
It was exciting for me because coming from my background, it’s a totally new industry. But I held on to something which is very common across any industry. I deal with people, I deal with infrastructure and I deal with resources. It’s not much different in that sense.
The only difference is that the industry is very complex. I appreciate complexity, also. It adds to the dynamics of it.
Q: What are some of the challenges AirAsia is facing? A: Clarity with the regulators. I have enough resources internally that will evaluate a route 30,000 times before a decision is made. I rely on my internal intelligence to give me a riskmanaged factor so that management can make a call on it.
Some routes will be too risky for us to take and we won’t do it. But some are worthy enough because the economics indicate that it’s a good place to be, and we would want to do it.
That is based on my data gathering, intelligence and so forth.
Then we put in an application and the application comes back to us stating otherwise. The rejection usually comes with very minimal reasons or none at all, to a certain degree. We need to have a better understanding on what is the cause of it.
We do planning not just in the air. I have to allocate resources and aircraft as well. Utilisation of aircraft is very important for our business. Things like that would have been in play months before we execute, but we are still reliant on another party to tell us yes or no.
I would enquire on that a bit more now, because if someone tells me this particular destination is not ready, then I must understand why, because my data shows otherwise in erms of population, the need, the supply and demand. Also, comparison of five years ago ver- sus five years ahead would be different. We cannot rely on past information if it’s not updated.
These are the things I feel, as a business, that curtail my growth, and if AirAsia wants to grow, then we need to have that level of freedom.
Q: Could you share the route that you applied for that was rejected by Mavcom?
A: Kota Kinabalu–Sandakan. They usually just give me a oneliner. You can imagine when I look at the one-liner and I can’t even figure that one out.
Please engage with us, tell us the specifics because we want to have an understanding. If the understanding or the explanation is clear and objective, we’ll probably agree to it.
Q: Who is making the call on air traffic approval or rejection?
A: From what I understand, Mavcom has the right to do that, apart from the protection of passenger rights, which they’re trying to educate everyone.
I agree we need to be regulatclarity ed, and gives us very good indication on where we can move and what we can and cannot do. And I can also attest that our engagement with CAAM is very good and we always update each other every other week and work closely for the betterment of the aviation industry.
The bit that I don’t get is, I don’t have enough clarity, for exwhen ample, I ask for flights and I get rejections and I don’t get that clarity of why it gets rejected.
Q: Have you brought up this issue with the Transport Ministry?
A: No, I have not had the opportunity to meet the new Transport Ministry (offiyet. cials) I think the time will come. But as I said, I wouldn’t shy away from sharing my concerns (with them) as well.
Q: Do you think there should be fewer bodies that regulate aviation space in Malaysia?
A: Yes. We can’t have too many. Too many cooks won’t work. This is what happens at the end of the day. The clarity is not there, there’s confusion because someone doesn’t underwhat’s stand happening and all that.
I think it will be great if I could just deal with one party and that’s it. Under the party, you can have your sub-divisions or subsidiaries and all that but one party needs to make a call on things and that will give us greater clarity. Things will be very straightforward.
I like to work in an environment where information is very clear and I follow it. It’s reciprocal. If I enquire, then I expect some level of replies or answers and viceversa when I get enquired, then it’s my duty to supply the same. What I feel is probably missing is that clarity, and I just don’t have it at the moment.
I am responsible to the shareholders. I was in the annual general meeting and I can see the eagerness, the attention to detail that our public shareholders have. They want us to grow. They want us to expand. They want us to invest.
Q: What about your dealings with aviation regulators in other countries? Do you also face issues on clarity? A: It has been pretty pleasant, to be honest. They are also very tourismoriented and I think they appreciate the networking capabilities of AirAsia.
We’ve met certain parties that go above and beyond to support us from airports. The airports will give us very good incentives to encourage us to fly in.
Q: So you only face the clarity issue in Malaysia?
A: The Malaysian side of things is more on the basis that clarity is not there. No one is telling me the true picture why I get rejected. And I just need that. Someone needs to tell me. I’m studying the landscape around the region, but yes, in Malaysia we have multiple parties that are managing the airspace here. So maybe we need to have more efficiency.
Q: What do you think of the passenger service charge? A: Obviously, I think that it’s too much. I think this is something to be reviewed, but I’m happy that the Transport Ministry has given some instructions to relook it and set a ceiling price.
I’ve been here six months. I walk into Kuala Lumpur International Airport 2 (klia2) every day and I have to explain to half the passengers I deal with that this is not my airport.
We are a tenant of the place with some level of expectations and it’s still not there. So where is the equality in comparison when it comes to the Kuala Lumpur International Airport and klia2 as the rates are similar for both? It doesn’t make sense.
Q: How is AirAsia’s relationship with Malaysia Airports Holdings Bhd?
A: I think we have had many challenges since I’ve come on board, but we have had good interaction with the new chairman as well as the new management. There are a few new guys in there whom I have known before.
So in terms of relationship, it’s clearly better to a certain degree but we still have some situations that we need to rectify.
I realised that coming into this organisation, the challenges are there. Nothing is hidden from me. It’s a matter of whether we can get to the same point together. So far in our dealings, there seems to be a move in the correct direction. But is it a challenge still? Yes.
Q: What is the plan for AirAsia to grow?
A: Firstly, cost is still a factor for AirAsia. We run this business based on cost-efficiency. Don’t get me wrong. It’s not cost to a point that things would be sacrificed and all that.
We know what we need to do to manage our operations but more importantly, from the perspective of growth, is the routes that I have — how to make them more efficient, add more flights or reduce, and to find new routes. That is what we are here for.
We need to run a business that grows. We’re in the region between the four-hour parameter that I’ve been given by the group. There are many unexplored destinations.
We are adding more aircraft into AirAsia and increasing the scheduled flights from certain hubs.
That is why I want to have that level of clarity and freedom so that I can allocate my resources to create more value not just for the business but also for the shareholders.
I was in the annual general meeting and I can see the eagerness, the attention to detail that our public shareholders have. They want us to grow. They want us to expand. They want us to invest.