Tony Fernandes – The Truly Air Asia Hero (Part 2)

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Dec 27 2006
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In 2004, AirAsia formed successful joint ventures in Thailand and Indonesia where AirAsia holds 49% stake in both companies. Thai AirAsia, a joint venture with Shin Corporation, Thailand’s largest telecommunication conglomerate, took to the skies in Feb 2004.

Ernst & Young in a statement said AirAsia was the first airline in the world to introduce SMS booking. It also introduced ticket-less travelling.

Fernandes’ biggest achievement has been to turn Air Asia into an international carrier. Before he arrived on the scene, countries in the region never had any kind of open-skies agreement. In mid-2003, Fernandes’ lobbying pushed Mahathir to raise the idea with the leaders of neighboring Thailand, Indonesia, and Singapore. As a result, those nations have granted landing rights to Air Asia and other discount carriers. “Fernandes has had remarkable influence in shaping government and airline thinking in Southeast Asia and beyond,” says Peter Harbison, managing director of the Center for Asia Pacific Aviation, a Sydney consultancy. “The Asia Pacific airline industry will never be the same again.”

Now, Southeast Asia is buzzing with successful, low-price carriers such as Thai Air Asia, Australia’s Qantas Airways’ (ASX : QAN) JetStar, Singapore-based Valuair and Singapore Airlines’ (SIN : S55) Tiger Airways. Even though this means more competition, Fernandes is proud of what he set in motion. “It was the popularity of low-cost carriers like Air Asia,” he says, “that forced them to move toward more open skies.”

When asked about his phenomenal success during an interview by CNN, Tony stressed that it’s the culture of the company to remain humble as it’s crucial to remember the roots of their beginning. Air Asia operates in a family-like environment without hierarchy where marketing, finance, engineers, cabin crew and pilots are all in one office which guarantee effective communication. There was an incident whereby a flight needed a couple of pilots but the pilots were stuck in a traffic jam – the Chief Pilot offered himself to fly in jeans which got the OK from Fernandes. The spirit of great camaraderie was the key succes factors which pull everyone together.

Imagine the pilots suddenly saw their CEO pushing the ladder and sometime having a cup of coffee with the guys who carry bags. People are allowed to think and staff are not afraid to send Tony an email on feedback on improvement ideas. No one thinks they are more important than the other. How many organizations allow such culture to flourish?

AirAsia, which is celebrating its fifth anniversary this year, 2007, has ordered 100 A320s with an option for 30 more. AirAsia, currently in the process of phasing out its B737-300s, would become the largest Airbus A320 operator in the Asia Pacific region by 2012.

On his next plan, Fernandes said the company was optimistic of securing rights to fly the lucrative Singapore-Kuala Lumpur route by year 2007. “I think we could have something next year. I think the only reason in not giving us Singapore is to protect Malaysia Airlines and it is about time that ends,” he said, adding that the carrier was confident of “taking a lot of hard traffic” from Singapore over to Kuala Lumpur. Meanwhile, AirAsia is engaged in talks with prospective companies to jumpstart the airline’s maintenance, repair and overhaul (MRO) facilities.

Fernandes said AirAsia’s goal over the next five years was to “keep increasing frequency as we connect more dots.” He further added – “Going forward, we will continue to build our brand and hope we will become a global brand of the size of Coca-Cola (NYSE : KO) and Nike (NYSE : NKE). I believe it is achievable.”

One of the reason I admire Tony is his passion and his humble character though he’s a multi-millionaire now. He successfully created a giant not because of his political connection (compare to some other tycoons) but because he really put in his own sweat on it, and that’s truly amazing. And now everyone can fly. If only Malaysia Airline System Berhad (KLSE : MAS, stock-code 3786) understand what it takes to run an airline company.

Go Back To Read: Tony Fernandes – The Truly Air Asia Hero (Part 1)

# TIP: If Tony were to leave AirAsia one of this day, reconsider your stock portfolio if you have AirAsia shares as not everyone has the “click” to run an airline.

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