Founder of Malaysian low cost carrier Ais Asia Tony Fernandez says he is looking to take the positive out of the current geopolitical crisis by investing in growth.
In March the carrier placed a $19 billion ‘landmark’ order of 150 A220s, the largest of its kind for the single isle aircraft.
Air Asia is in its 25th year and Fernandez told the Trip.com Airline Global Conference in Amsterdam this week the current decade has been the most challenging.
In a typically relaxed interview at the conference, Fernandez recalled how he was inspired to set up Air Asia by the emergence European of low cost carriers like easyJet.
“I was a big fan of Freddie Laker….I used to hang out at Heathrow Airport, and just was amazed at how people could fly to New York for $59
“And so I thought, wow, that was a pinch me moment. This looks great. So, I took a bus to Luton Airport, and I saw people flying to Barcelona for nine pounds, to Paris for six pounds, booking on easyjet.com.
“I always say there’s a very fine line between brilliance and stupidity, right? It’s very narrow, and so I said I could do that.”
At the time only 6% of Malaysians flew, and Fernandez, who has previously in the music industry, acquired a failing airline with two planes and 254 staff.
Despite the challenges in starting an airline against competitors with much larger budgets, Fernandez said this decade, due to the COVID pandemic, has been the hardest.
“It’s easier to start an airline with two planes and 200 staff than to restart an airline with 300 aircraft and 21,000 staff. It has been really hard.
“A lot of airlines got support from their governments. We got nothing…we had to do it all ourselves, and we lost $10 billion of revenue during COVID.
Fernandez described himself as “a little bit contrarian”. “Crises are a great time to build market share when everyone’s kind of like thinking what are we going to do?”
He said he was able to negotiate an “amazing price” for the order of 150 A220s and said the war on Iran will inevitably end, just as COVID did.
“Time and time again the world has proven that travel is very sticky and…American Express and Visa said that in a recession people would cut other things before travel.”
Fernandez said in Southeast Asia travel by train instead of by air is not really an option. “So I think we’re in a really good part of the world,” he said.
A “huge believer” in AI, Fernandez claimed it will “transform travel” and he says Air Asia is already benefitting from it operationally.
“It’s going to improve productivity, it’s going to improve enterprise, it’s going to improve customer [service], and massive on operations.
“We’ve been playing around with it for a long time. Depending on the age of your aircraft, it burns fuel differently.
“If you fly to Singapore, you’re going to burn a lot more fuel than if you’re cruising 36,000 feet for three hours.
“By getting the right aircraft at the right window, it just can’t be done humanly. And so we use AI for that, and we’ve saved 4% fuel.
“Operations can be massive. There’s a whole customer experience thing, and I think you can remove a lot of friction for the customer.
“Implementing it is key. I find AI for the customers a little bit rigid, it’s not there yet, but eventually it will be, and I think it will transform travel.”
Fernandez said it is time for low cost airlines to collaborate and work together more. “Traditionally low cost airlines don’t work with other airlines. I think that’s wrong.
“There’s a few airlines we’ve been partnering with to make the world a smaller place.
“There’s a lot of value in partnership, and we believe that tremendously, we’re beginning to fly to Europe, and tied up with many low-cost carriers.”
Fernandez recalled how Air Asia was able to survive the COVID crisis by diversifying and building out its brand and company ethos beyond aviation.
“During Covid, we had no support, we had to really reinvent ourselves, and so we took various assets in the airline to create new companies, which is saving the airline money.
“We created an engineering company [Asia Digital Engineering], which is doing unbelievable things.
“We’re so far ahead. We’re the fastest in the world at doing a C check. Air France is sending us planes.
“We never had a cargo company, but when we couldn’t fly, I took all the seats out. I thought this is a pretty good business.
“Sp we built a cargo airline called Teleport which just become number one in ASEAN, and then we took our website…and we created our own kind of small little OTA.”
“Our food is very popular, so we created restaurants and now we’re doing grab and go.
“We’ve opening over 500 of them and I thought why don’t we brand our food. Ninety million people fly us, and I don’t have to pay any advertising.
“Ninety million people will know my food brand. And then we created a branding company.
“AirAsia, to me, is not an airline anymore, it’s a philosophy, it’s how we’ve treated people.
“We have 21,000 staff, we don’t have any unions, we’ve got a very flat structure. We have not a single day of industrial action. We were the first airline to have female pilots.
“You join our company…and you can dream. We have many people who carry bags for us, or telephone operators, who are now CEOs or captains.
“We’ve created this amazing culture. So, we created this company called Air Asia Next, which is how we take our way into other industries without us financing it.
“A very large hotel company, which we’ll be announcing next month, is licensing our name to create AirAsia Hotel.
“And even a multinational hospital group want to bring AirAsia culture into the hospital, so there’s going to be an AirAsia hospital opening up in Malaysia in the next six months.”
Fernandez ended on a note of optimism: “Those are the five companies we created during COVID just to survive. My cabin crew were delivering food, my pilots were taxi drivers during this period.
“To everyone here, it’s a crisis, but through a crisis there’s always an opportunity, there’s always a silver lining.”
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