Flamboyant AirAsia Boss Confronts First Major Crisis
AirAsia Group chief executive Tony Fernandes, left, talks with Indonesia AirAsia chief executive Sunu Widyatmoko during a news conference at the Juanda International Airport in Surabaya on Sunday. (Reuters Photo/Beawiharta)
Kuala Lumpur. Malaysian mogul Tony Fernandes, who transformed a floundering carrier into Asia’s biggest budget airline, faces his first major crisis after an AirAsia plane went missing on Sunday with 162 people on board.
AirAsia is credited with starting a revolution in the skies of Southeast Asia and has seen spectacular growth under Fernandes’ low-cost, low-overheads model despite intense competition.
The ebullient tycoon is one of Asia’s most visible entrepreneurs, carving out an image that has seen him frequently compared to colorful Virgin Group chairman Richard Branson.
Fernandes maintained an image of calm on Sunday even as his company plunged into its first major crisis after an Indonesia AirAsia passenger jet went missing in bad weather en route from Indonesia to Singapore.'
“Thank you for all your thoughts and prayers. We must stay strong,” he tweeted as he left for Surabaya, where most of the passengers are from. “My only thought [sic] are with the passengers and my crew.”
This incident caps a disastrous year for Malaysian aviation which saw beleaguered rival Malaysia Airlines suffer two air tragedies in rapid succession.
Indonesia AirAsia is 49 percent owned by Malaysia-based AirAsia Bhd., with local investors holding the rest.
“This is my worst nightmare. But there is no stopping,” Fernandes said on his Twitter feed, which has nearly 1 million followers.
“I as your group CEO will be there through these hard times. We will go through this terrible ordeal together and I will try to see as many of you.”
AirAsia Group chief executive Tony Fernandes walks in front of family members of passengers on board missing Indonesia AirAsia flight QZ8501, at a news conference in Juanda International Airport in Surabaya on Sunday. (Reuters Photo/Beawiharta)
The AirAsia group of airlines has had a virtually unblemished safety record until Sunday compared with competitors like Malaysia Airlines and Indonesian carriers such as Lion Air and Garuda Indonesia which have lost several planes in crashes over the last decade.
“Tony Fernandes and AirAsia are highly regarded with the aviation industry. The airline is highly successful and had an excellent safety record,” said John Strickland, director at London-based JLS Consulting.
Southeast Asian carriers Lion Air and AirAsia have led an aircraft buying binge and placed record orders worth tens of billions of dollars with Boeing and Airbus as they race to get people flying in a region forecast to overtake the United States as the biggest aviation market.
AirAsia was built up from two planes in 2001 to an airline industry titan that operates more than 180 jets in just over a decade.
With 475 aircraft ordered or delivered, AirAsia has emerged as the biggest Asian customer of Airbus. The orders have been so large they have earned a footnote in the world’s largest trade dispute between Airbus and Boeing over mutual accusations of illegal subsidies.
The airline has been feted by European politicians as it became one of the largest single export customers for European industry and helped secure thousands of jobs.
Over the last few months, AirAsia’s profits have taken a knock due to a grueling price war in its home market and it has had to defer some plane orders, with signs of over capacity in some Southeast Asian markets.
Defying naysayers
A former record industry executive who acquired the then-failing airline in 2001, Fernandes is ranked 28th on the Forbes list of Malaysia’s richest with an estimated net worth of $650 million.
The tycoon, a flamboyant spirit in Asia’s staid business world who favors blue jeans and caps over power suits, has made a habit of defying naysayers.
He took over loss-making AirAsia shortly after the September 11 attacks in the United States sent the global aviation industry into a tailspin, and was given little chance of succeeding.
He bought the airline, its two aircraft, and 40 million ringgit ($13.4 million) in debt for the token sum of one ringgit, mortgaging his house to pour money into the carrier.
But with his motto “Now everyone can fly”, he turned it into a growing force in the aviation industry, with profits mounting and its route system expanding worldwide.
Fernandes, who is of Indian-Portuguese descent and married with two children, struck a deal with F1 boss Bernie Ecclestone in 2011 for a majority stake in Premiership football team Queens Park Rangers.
Entrepreneurial spirit
Endau Analytics aviation analyst Shukor Yusof said his entrepreneurial spirit would survive Sunday’s apparent tragedy.
“This incident will not dampen Fernandes’ business spirit. This is such an unfortunate incident. AirAsia remains a strong budget carrier. I think the people will rally behind AirAsia,” he told AFP.
The airline, which now has more than 120 A320s and is one of the biggest customers for the European aircraft maker Airbus, is expecting nearly 360 new aircraft to be delivered by 2026.
AirAsia, which has some of the lowest unit costs in the world, has raked in business awards and accolades over the years, while expanding aggressively.
In 2013 it was ranked as Asia and the world’s best low-cost airline for the fifth time in a row.
After Sunday’s apparent disaster, AirAsia swiftly replaced its distinctive bright red logo on its social media pages with a grey background.
Malaysia Airlines Flight MH370 disappeared on a regular flight from Kuala Lumpur to Beijing in March with 239 passengers and crew, and in July, MH17 was shot down over troubled Ukraine killing all 298 on board.
News of the missing plane comes at the end of a disastrous year for the country’s airlines. Malaysia Airlines lost two aircraft this year.
Fernandes has had a long-running war of words with flag carrier Malaysia Airlines and has pushed hard for landing rights and butted heads with the Malaysian government over securing new routes.
AFP & Reuters
