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Thursday, 21 August 2008

Tony Fernandes: the airline chief of Asia

By Chris Pritchard (with AAP941-945)

KUALA LUMPUR: "This is my favourite part of the job," confides Tony Fernandes as he hefts a suitcase onto a trolley. "I earmark at least three hours a day to be away from my desk."

In his trademark uniform of blue jeans, red Air Asia T-shirt and company baseball cap, Malaysia-born Fernandes spends some of this time meeting passengers in the departures hall (happily posing with them as they take we-met-the-boss souvenir photographs) and glad-handing travellers as he strolls along the aisles of departing flights. It's celebrity stuff - and the 44 year-old airline chief executive clearly enjoys it.

"I get to meet passengers and chat with staff members I might otherwise not see," he says.

Inevitable comparisons are made with Sir Richard Branson, high-profile boss of Britain's Virgin Group. Fernandes, by the way, counts a Virgin stint among previous jobs.

"Fortunately, I've got a great team," he says. "This frees me up to be the public face of Air Asia."

Fernandes has other business interests, too. These include control of a budget hotel brand and a consumer finance operation.

He leads me to his office in Air Asia's headquarters above Kuala Lumpur's bustling Low-Cost Carrier Terminal, which the airline dominates. The purpose-built low-cost facility, l5kms from Kuala Lumpur International Airport but sharing the same runways, is already bursting at the seems. Officials expected it to be adequate for many years but now plan a newer terminal.

Air Asia's office is open-plan - with Fernandes working from space in a corner. "There's only one door in and one door out," he points out.

He describes Air Asia's corporate philosophy as "flat and without hierarchy". For instance, no-one gets a private office and business cards omit job descriptions.

Fast-expanding Air Asia is one of South-East Asia's biggest airlines. Its 79 mostly Airbus aircraft (more than 100 others are on order) head to 72 regional destinations. Among these are Thailand's Phuket resort cluster and Cambodia's temple city of Siem Reap.

Modelled on Europe's Ryanair and the United States' Southwest Airlines, the low-cost carrier's bright-red aircraft are a familiar site at South-East Asian airports.

Air Asia serves destinations up to four hours' flying from Kuala Lumpur. Longer-haul flights are operated by sister airline Air Asia X which presently gŒs only to China and Australia, where it uses the Gold Coast airport. Melbourne and Perth will be added in November.  Flights from the Malaysian hub to Britain are planned for next year.
According to Fernandes, Air Asia X will fly to most Australian state capitals within two years. However, it prefers cheaper secondary airports - where these are available - rather than cities' main airports. Optional bus transfers take passengers to city centres.

Fernandes, an accountant, is a former music industry executive credited with discovering and nurturing some of Asia's biggest stars. His move into the airline industry was widely dismissed as doomed to crash. Rather than start from scratch, he took over a small and ailing carrier that was losing money. He picked it up for a nominal fee and, in seven years, has turned it into a highly successful operator.

Fernandes concedes "high fuel prices are a worry. I can't claim they aren't. We're certainly looking at ways to try to save money".

However, he insists, Air Asia won't scale back expansion plans.

"What's more, we don't, at this stage, intend raising fares." In the current tough climate, "some airlines will go to the wall - and some have already done so".

Worst hit, he predicts, will be small carriers with only a few aircraft or routes.

The key to success, Fernandes maintains, is market share. "People want to fly and we provide a way for them to do so affordably. We get them to their destinations affordably without losing money.  Don't tell me people are going to stop flying. They'll fly if prices are low."

Fernandes is scathing about other airlines' strategies.

"They concentrate on the pointy end: business and first class. I think this is in part because it's an industry - like the music business - driven by big egos. But what about all the people who travel in economy?"

Another of Fernandes' gripes is that airlines don't generally build the destinations they serve.

"Emirates is an exception," he maintains. "The airline markets its destinations very well. We do the same. We pick places other carriers ignore and then develop them."

Indeed, many queues at Kuala Lumpur's LCCT are for flights to places in Indonesia, for instance, where tourists didn't go in large numbers but now do.

Air Asia's holiday arm sells low-cost packages to these destinations, including hotels and activities.

"Tourist industries have developed quickly in places that have suddenly seen themselves becoming part of our network."

In Fernandes' view, "there's a huge market in Asia of people who haven't previously flown - we give them an incentive to travel."

Smaller low-cost carrier Tiger Airways, based in Singapore but with a domestic operation in Australia, is among targets for the airline chief executive's criticism.

"They don't have that many aircraft," he notes. "But they opt to divert attention from their home market in the Association of South-East Asian Nations (ASEAN) countries with 600 million people - and I'm not even including the rapidly-growing Chinese and Indian markets - and focus instead on Australia, a small market of 20 million people. It seems to me a very strange business decision."

Air Asia's aim - using Air Asia X - in Australia is both "to bring Australians to our hub in Kuala Lumpur so as to feed them into our Asian network and to send Asian tourists to Australia combining our network with Air Asia X".

"From next year, Australians will be able to go all the way to Britain using Air Asia X, through Kuala Lumpur. The route will also be popular with Europeans heading to Australia."

While Air Asia X seats are assigned, those on Air Asia aren't. But passengers can pay for priority boarding to choose seats before others board.

Payment is for what travellers use or consume: to check in baggage (a charge applying only on Air Asia X) as well as for, food, drink, blankets, pillows and bus transfers to city centres.

A traveller's tip: buy some Malaysian currency before travelling. (Other currencies are accepted but not at the best exchange rates.)

Fernandes explains his airline's philosophy as "getting people from A to B as inexpensively as possible but obviously not at a loss. We want them to keep coming back. Anything other than the flight is optional - if you want it you pay a reasonable but not exorbitant price".

Copyright 2008: Allesto Media Pty Ltd

Thursday, August 21st, 2008

MAS remains in cost saving mode: Munir

By Yu Ji

KUCHING: Malaysia Airlines (MAS) remains in cost saving mode and will not introduce new routes, said its chairman Tan Sri Dr Mohd Munir Abdul Majid yesterday.

€ŒJust within the last quarter, higher price of fuel cost us an extra RM780 million,€ he told reporters in Sematan after launching a MAS-sponsored summer camp for school children. As such, we are not looking at new routes even though oil price has come down a little from its highest level. In such a situation, the management is tied to cost saving, so expansion takes the second seat.€

On Monday, MAS announced that it planned to cut flight frequency by six per cent this year, but had no plans to reduce fuel surcharge.

Munir said jet fuel cost about 30 per cent more than crude oil.

€ŒPeople forget that crude has to be refined before it becomes jet fuel. That€™s a premium of about 30 per cent. Had prices remained within the normal range, we would have made an extra RM780 million profit. It€™s such a great challenge,€ Munir said.

The price of oil averaged US$80 a barrel in 2007. Since peaking at over US$140 per barrel earlier this year, prices have thankfully been on the wane. It dropped to just above US$111 a barrel within the last few weeks.

Nonetheless, MAS this week announced that its pre-tax profit in the first half of 2008 had dropped to RM195 million, from RM263 million in the corresponding period in 2007. A company press release cited increased expenses as a key factor.

MAS is however hedging 48 per cent of its fuel requirement for 2008 at an average price of US$102 per barrel. Its latest move to cut cost was introduced on Aug 5. Dubbed a €˜flexi employment programme€™, it allows staff to either go on leave (but still maintain reduced salaries or travel and medical benefits) or work part time with salaries halved.

The long-established air carrier has a staff strength of about 19,000.

Asked how much MAS expected to save from the €˜flexi employment programme€™, Munir said it would depend on how staff take to the programme.

€ŒIt€™s just been introduced so it€™s difficult to assume how much we would save because it€™s not a forced scheme,€ he said. "There are American airlines that are throwing people out€¦we are not in that kind of emergency, panic mode. So while the cost savings will proceed, this (programme) is not something, which is critical to us €“ in the sense that we must save so much from this programme.€

Copyright 2008 © The Borneo Post Sdn Bhd

Wednesday August 20, 2008

Fly to Melbourne from as low as RM99

MELBOURNE: AirAsia X has announced its latest international route from Kuala Lumpur to Melbourne.

The low-cost carrier also announced its first round of travel deals of fares from as low as RM99 from Kuala Lumpur and AUD199 nett from Melbourne to Kuala Lumpur.

AirAsia X will fly direct to Melbourne Airport (Tullamarine) on Nov 12 with four return flights per week between Melbourne and Kuala Lumpur.

It is planning to increase to daily return flights during the peak season from December to mid-January 2009.

The route will be serviced by the airline€™s first brand new wide-bodied Airbus A330 aircraft and includes choices of hot meals on board, fixed-backshell seats with trademark sleek black leather upholstery, in-flight entertainment, power points in all seats and even WIFI access in-flight entertainment services.

Melbourne will be AirAsia X€™s fourth destination in its long-haul network following the launch of services to the Gold Coast, Hangzhou (Shanghai) and Perth.

Guests can book online at www.airasia.com or mobile.airasia.com and the promotional fares will be made available between Aug 21 to 24 (Malaysian time) for travel period between Nov 12, 2008 to April 30, 2009.

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VISIT Malaysia Year will be officially over on August 31, in conjunction with Malaysia's 51st year of independence.

From September through to 2009, Tourism Malaysia's will be promoting destinations with an emphasis on ecotourism.

New destinations to be promoted include highlands resorts such as Fraser's Hill and Cameron Highlands. Beach destinations such as Pangkor in Perak, Cherating in Pahang and Desaru in Johor will also be promoted aggressively to overseas markets.

Tourism Malaysia will still continue to promote annual events that have proven to be international crowd-pullers, such as Petronas Malaysian Formula One Grand Prix and the Sarawak Rainforest World Music Festival, which drew a crowd of 22,000 over three days in July.

Other crowd-pulling events include Miri Jazz Festival in Sarawak's northern tourism hub of Miri and Penang World Music Festival, which will celebrate its third year in 2009.

Copyright 2007 © TTG Asia Media Pte Ltd