AirAsia’s Dato’ Sri Tony Fernandes took an ailing airline and gave it wings.
By JENNIFER Y. CASPE-COCUACO
Donning an AirAsia cap, Dato’ Sri Tony Fernandes, speaker at the first South East Asian Youth Engagement Summit, goes up the stage of Kuala Lumpur’s Putrajaya International Convention Centre followed by four flight attendants in AirAsia’s chilli red garb. The casually dressed CEO of AirAsia announces that the first person to hand him something red will win a trip to London. Two youth delegates scamper up the stage, one of them tripping on her own feet before reaching Fernandes. The 45-year-old businessman decides to give both of them the free trip anyway. This scenario is a good illustration of how Fernandes built his low-cost airlines from the ground up – by enticing would-be passengers with free trips.
In 2001, Fernandes was the vice president for ASEAN at Warner Music South East Asia. One night, he saw an Easy Jet television ad and got interested in the concept of low-cost carriers. He realised this was what he wanted to do. He called his wife and told her of his plan, and she couldn’t stop laughing.
Fernandes mortgaged his house and then rallied a couple of his buddies in the music industry to set up Tune Air Sdn. Bhd. The Malaysian government, however, turned down the license application. Fernandes quickly arranged a meeting with then Prime Minister Dr Tun Mahathir Mohamad. Dr Mahathir suggested that, instead of getting a license, Fernandes should buy the fledgling AirAsia, a heavily indebted subsidiary of a government-owned conglomerate.
With youthful audacity he announced, “I will buy AirAsia for one Malaysian ringgit!” He got this reply: “Yes, you can buy it tomorrow.”
Fernandes might have gotten the airline at one ringgit (29 cents) but he and his partners also inherited 40 million ringgit worth of debt. His vision, nevertheless, took flight that same year with 250 employees and two ageing Boeing 737-300 flying to just one destination. A tragic event, however, threatened to crash his dream.
The September 11 attacks in the US made people afraid to fly. But Fernandes saw a golden opportunity in what could have been a major setback. Airline leasing costs plummeted by 40 percent, saving the company a lot of money. Airline lay-offs allowed him to hire experienced staff at lower costs. A year later, AirAsia had paid off all its debt and broken even.
“We Asians have this habit of kicking ourselves and saying it can’t be done. Anything is possible when you put your mind to it,” he says. Nine years later, AirAsia is the fastest growing low-cost airline in the world, carrying a total of 85 million passengers to date, with 7000 employees and 90 new airplanes flying to over 130 destinations in Asia, Australia and Europe.
Fernandes, a London School of Economics alumnus, is a laid-back CEO. “I go to work wearing regular clothes. My pants are sometimes older than my employees.” And he runs AirAsia with a unique set of principles. For one, the company has a flat structure, where everybody has access to the big boss. By removing company bureaucracy, he gets everybody talking and giving invaluable ideas. “People are our best asset. Get the best people and let them grow. Let them fulfil their dreams. Help them discover potential they never thought they had,” he advises.
When the company was still relatively small, Fernandes used to try his hand working in the different departments. He was a bag carrier, check-in officer and even flight attendant for a day. It allowed him to get on the ground and see real problems and needs. It also gave him the chance to spot potential stars in the company. When he learned that some bag carriers dreamt of becoming pilots, he sponsored their training. He’s proud of the fact that “18 months later they are flying planes.” AirAsia also boasts of having 35 female pilots in their staff. “If women can run a country, they can certainly fly a plane!” he exclaims.
Fernandes ends his well-applauded speech by encouraging the summit delegates with his credo: “Believe the unbelievable. Dream the impossible. Never take ‘No’ for an answer!”