The founder of Malaysian low-cost airline Ais Asia, Tony Fernandez, says he is looking to take positives from the current geopolitical crisis by investing in growth.
In March, the airline placed a “historic” order for 150 A220s worth $19 billion, the largest of its kind for a single-island aircraft.
Air Asia turns 25 years oldth year and Fernandez told the Trip.com Global Airline Conference in Amsterdam this week that the current decade has been the most challenging.
In a typically relaxed interview at the conference, Fernández recalled how he was inspired to create Air Asia by the rise in Europe of low-cost airlines such as easyJet.
“I was a big Freddie Laker fan… I used to hang out at Heathrow airport and I was amazed how people could fly to New York for $59.
“And then I thought, wow, that was a pinch me moment. This looks great. So I took a bus to Luton airport and saw people flying to Barcelona for nine pounds, to Paris for six pounds, booking on easyjet.com.
“I always say there’s a fine line between brilliance and stupidity, right? It’s a fine line, so I said I could do that.”
At the time, only 6% of Malaysians were flying, and Fernandez, who had previously worked in the music industry, acquired a bankrupt airline with two planes and 254 employees.
Despite the challenges of starting an airline against competitors with much larger budgets, Fernandez said this decade, due to the COVID pandemic, has been the most difficult.
“It’s easier to start an airline with two planes and 200 employees than it is to restart an airline with 300 planes and 21,000 employees. It’s been really difficult.
“A lot of airlines got support from their governments. We got nothing… we had to do everything ourselves and we lost $10 billion in revenue during COVID.
Fernández described himself as “a little contrarian.” “Crises are a good time to increase market share when everyone is thinking, what are we going to do?”
He said he was able to negotiate an “incredible price” for the order of 150 A220s and said the war against Iran will inevitably end, just as COVID did.
“Time and time again the world has shown that travel is very complicated and… American Express and Visa said that in a recession people would cut back on other things before traveling.”
Fernández said that in Southeast Asia traveling by train instead of by plane is not really an option. “So I think we’re in a very good part of the world,” he said.
Fernandez, a “big believer” in AI, said it will “transform travel” and says Air Asia is already operationally benefiting from it.
“It will improve productivity, it will improve the company, it will improve customer service.” [service]and massive in operations.
“We’ve been playing with it for a long time. Depending on the age of the plane, it burns fuel differently.
“If you fly to Singapore, you will burn a lot more fuel than if you cruise at 36,000 feet for three hours.
“Placing the right plane in the right window cannot be done humanly. That’s why we use AI for that and we have saved 4% fuel.
“Operations can be huge. There’s a whole customer experience issue, and I think you can eliminate a lot of friction for the customer.
“Implementing it is key. I think AI for customers is a little rigid; it’s not there yet, but eventually it will be, and I think it will transform travel.”
Fernández said it is time for low-cost airlines to collaborate and work more together. “Traditionally low-cost airlines don’t work with other airlines, which I think is wrong.
“There are some airlines that we have partnered with to make the world a smaller place.
“There is a lot of value in the partnership and we firmly believe that we are starting to fly to Europe and partner with many low-cost airlines.”
Fernández recalled how Air Asia was able to survive the COVID crisis by diversifying and developing its brand and entrepreneurship beyond aviation.
“During Covid, we had no support, we had to really reinvent ourselves, so we took several assets from the airline to create new companies, which is saving them money.
“We created an engineering company [Asia Digital Engineering]who is doing incredible things.
“We are far ahead. We are the fastest in the world to carry out a C check. Air France sends us planes.
“We never had a cargo company, but when we couldn’t fly, I took out all the seats. I thought it was a pretty good business.
“So we built a cargo airline called Teleport, which just became number one in ASEAN, and then we took our website… and created our own kind of little OTA.”
“Our food is very popular, that’s why we created restaurants and now offer takeaway.
“We’ve opened more than 500 and I thought, why don’t we put a brand on our food? Ninety million people travel with us and I don’t have to pay for advertising.”
“Ninety million people will know my food brand and then we will create a branding company.
“For me, AirAsia is no longer an airline, it is a philosophy, it is the way we have treated people.
“We have 21,000 employees, we do not have unions, we have a very flat structure. We do not have a single day of strike. We were the first airline to have female pilots.
“You join our company… and you can dream, we have many people who carry suitcases for us, or telephone operators, who are now general directors or captains.
“We’ve created this amazing culture, so we created this company called Air Asia Next, which is how we made our way into other industries without us funding it.
“A very large hotel company, which we will announce next month, is licensing our name to create AirAsia Hotel.
“And even a multinational hospital group wants to bring AirAsia culture to the hospital, so an AirAsia hospital will open 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 delivered food, my pilots were taxi drivers during this period.
“For everyone here, it is a crisis, but through a crisis there is always an opportunity, there is always a silver lining.”
