Saturday, May 1, 2010

AirAsia CEO Fernandes Keeps Focus On India

Face to Face

Aviation Week & Space Technology May 03 , 2010 , p. 52
Neelam Mathews
Sakhir, Bahrain

Printed headline: On the Fast Track

Tony Fernandes

Age: 46

Education: Educated at Epsom College; graduated from the London School of Economics in 1987.

Career: Became financial controller of Warner Music International in 1987; worked as an auditor at Virgin Atlantic and as the financial auditor for Virgin Records. Named managing director at Warner Music Malaysia in 1992. Became vice president of Warner Music-Southeast Asia in 1999 and left in 2001 to buy the ailing AirAsia.

With a background in the music business, Tony Fernandes did not seem a perfect candidate to take on the legacy carrier establishment when he acquired Air­Asia. Just weeks after the 9/11 terrorist attacks, Fernandes paid a token 25 cents for the airline, which was backed by the Malaysian government and carried a $12-million debt. He retired the debt in two years and since then, Fernandes and his partners have turned their Kuala Lumpur-based carrier into the largest budget airline in the region. They have doggedly opened new destinations, tapping first-time travelers with rock-bottom fares. AirAsia and its two affiliates—Thai AirAsia and Indonesia AirAsia—are moving swiftly toward an all-Airbus fleet, operating 70 A320s now, with 175 on order. The budget game plan includes Air­Asia X for long-haul services in partnership with Virgin Atlantic founder Richard Branson. AirAsia X flies six A330-200s and two A340s, with 25 A330-200s and 10 A350s on order. In all, AirAsia and AirAsia X serve a network of 130 routes covering 70 destinations, including China. The focus now is on new routes for India and the U.S. Fernandes’s passions include Formula One racing and it was at a race in Sakhir, Bahrain, that he took time to discuss AirAsia’s future with Contributing Editor Neelam Mathews.

AW&ST: How does it feel to be Asia’s largest carrier?

Tony Fernandes: We have proved so many people wrong. Nobody thought we could do it.

Have you come close to the point where you are bigger than your brand?

I don’t know. . . . I’m not sure I can answer that question. Ultimately, one cannot be bigger than the brand. The brand will outlive me, [just as it has] Richard [Branson] at Virgin Atlantic and Stelios [Haji-Ioannou] at EasyJet.

How do you view the future of the two airlines?

AirAsia and AirAsia X are run by CEOs. I’m the glue that sticks them together. I want to emphasize that to continue driving AirAsia X, the two should be unified and break the conventional rule that long-haul and short-haul low-cost carriers do not mix.

So when will they be merged?

I can’t say too much on the merger until it’s formalized.

You have ordered 10 Airbus A350s. Was this a sage choice?

We believe that right now there is no plane that really can do long-haul effectively in the Airbus family. The A340 is rubbish. The A350 was the only choice at that time. Now there is the variant of the A330-200 long-haul, which may suit us better. So we have to wait and see.

So you might change the order?

We’ll have to wait and see.

Any chance that you will look at the A380?

I don’t like anything with four engines. It’s too expensive.

One would think that being allowed to fly to Singapore, where there was so much opposition to you, would be on top of your list. Do you hope to start an AirAsia in Singapore one day?

I don’t think they will allow it. Their two airlines are very weak, so we will not be allowed to start there.

What about an AirAsia in the Middle East?

No, we do not want to spread ourselves too thin.

Recently, you announced a cooperation agreement with Jetstar, a budget subsidiary of Qantas Airways. It was to be in areas of joint purchase of new aircraft, ground and passenger handling services and maintenance. What has come of it?

Yes, it will be in all those areas and more. It will be in cross areas—for revenue streams. You’ll see a combination of a lot of years’ work in the next three months. Wait and see.

You have planned 148 weekly flights to India by the end of 2010. What is next?

In India, we will continue to do what we are doing and push airports to be more responsive. I waited for seven years for this. You asked me when we would do it—we did it, we hit it! [However], we have just scratched the surface. I should be doing 600 flights to India. Look at Trichy [in South India]. Everyone laughed at me when I started to fly there. Now we are planning a thrice-daily service. Nobody could do it before. It just shows what a tremendous opportunity there is in India. By the end of 2011, we will have added 30% more flights to India over 2010.

Do you expect all these people to head for Malaysia?

We will start flights to India not only from Kuala Lumpur but from Jakarta and Bangkok. We will also fly beyond [these destinations]—to Bali; Phuket, [Thailand]; and Australia. There is a huge Indian diaspora there. Malaysia has a population of 24 million. I have generated 24 million passengers. The Indian diaspora is vast and spread out. Traffic will be two-way, as there are a lot of guys running around to India from Australia.

Should the Indian rules allow it, would you consider setting up an AirAsia India?

Yes, one day. For the moment, I have my work cut out.

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