Tony Fernandes – “Now Everyone Can Fly”

Smart Finance

Born    : 30th April 1964 in Kuala Lumpur, Malaysia

Money Wise

Occupation      : Group Chief Executive Officer / Director of AirAsia Berhad

Net worth        : US$230 million.

Tony_Fernandes

Though budget airline phenomenon has been around for two decades in the US and more than 10 years in Europe, it well goes to the credit of Tony Fernandes; who thought it worthwhile to try the concept in the South East Asian region.

He had an ambitious drive to realize his childhood dream of owning an airline, and set up Air Asia, Asia’s first budget airline. That very dream sometimes became a nightmare for the region’s more established full-service carriers, who have watched the no-frills airline’s rising popularity and ticket sales with a considerable degree of alarm.

When Air Asia took the first flight in 2001, many critics in the business community pooh-poohed the idea and said that it would not survive even two months. Some kinder souls said that the operations would be grounded within a period of six months. There were, after all, many barriers in the highly-regulated and competitive airline industry, and a budget airline was a totally new creature in the market. Few believed Fernandes, CEO and director of TuneAir Sdn Bhd, which owns AirAsia, would be able to get the low-cost carrier to take off properly, let alone pilot it to great heights.

When he was young, his parents wanted him to become a doctor, however they allowed him to pursue the field of studies of his choice, the moment he told them about his interest. After graduating from London School of Economics in 1987, he worked as an accountant for Richard Branson’s Virgin Records from 1987 to 1989. At 28, he became the youngest person in recording industry’s history to head Warner Music Malaysia and thereafter, moved up to serve as ASEAN Vice-President of Warner Music.

When he told his wife he was going to start an airline, his wife laughed and said, “why can’t you think of something simple?”Tony replied, “Life is short. If I fail, I fail. At least, I won’t be saying when I am 60 years old that I should have tried this!” Even before Sept. 11, the world’s airlines were in trouble, and his move was not universally hailed as a wise career choice. Most people thought he was crazy.

The_AirAsia_StoryBut Tony Fernandes looked at the brighter side. In fact, the timing was perfect: Since Sept.11, aircraft leasing costs were down by 40 per cent. He could get newer Boeing models than the sick airline had before at the same price. There were many airline layoffs that meant the staff was readily available.

In fact, he had virtually zero experience running an airline. It was the typical story of the underdog starting from nothing. Fernandes, now 40, had to mortgage his house, pour all his savings into the company and rope in several friends as investors. Drawing inspiration from the successes of Ryanair in Europe and Southwest Airlines in the US, he was convinced there was a ready market for budget flying in Malaysia and Asia just waiting to be tapped.

When TuneAir bought AirAsia in 2001 for the token price of RM1, it took over the ailing airline’s two aircraft and debts of RM40 million. After seven months in operation, the budget carrier managed to repay all its debts and make a profit of RM19.4 million. In June 2002, its profit had ballooned to RM30 million. By the end of that year, its fleet had expanded to 10 Boeing 737 aircraft and flown some three million passengers. In November, it formed a joint-venture airline with Thailand’s Shin Corp to operate flights to Thailand. The maiden flight from Kuala Lumpur to Phuket took off on Dec 8.

The Air Asia business model slashed fares on heavily traveled routes, turned around planes much faster than before and stopped serving complimentary food and drinks. Eliminating meals meant that the normal complement of cabin crew could be cut from six to three. And in order to keep the planes in the air more, the flights were expected to spend only 25 minutes on the ground at one time. If passengers are late, they will simply forfeit their tickets. Air Asia was not going to wait. Within a period of four years, the airline had a thriving business, had grown from a modest two planes to 28 in its current fleet, and operates over 100 domestic and international flights daily.

Air Asia’s growing popularity among travelers has compelled full-service carrier,, to scramble for a slice of the budget-flying share themselves. Singapore Airlines (SIA) is setting up Tiger Airways, and Thai Airways International is in talks with potential partners for a similar venture. Australia’s Qantas Airways has announced Jetstar, an attempt to take on British entrepreneur Richard Branson’s Virgin Blue, which commands about a third of the domestic flight market in Australia. Meanwhile, Singapore-based ValueAir, set up by a former SIA executive, has started flying in 2004. All of a sudden, it seemed that a man’s childhood dream has shaken and changed the airline industry across the region.

MALAYSIA BUDGET AIRLINES

People may hate him for he speaks his mind. But what he has done is to wake up everyone from their complacency. His low-cost carriers have also become a boon to tourism for destination countries. To consumers, Tony has reversed decades of brainwashing that air travel necessarily has to be costly. No wonder, Malaysian travelers welcomed its cheap tickets with open arms from day one. Two years after its inception, the new airline was laughing its way to the bank and spreading its wings across the region.

Air Asia was named Asia Pacific Low Cost Airline of the Year 2004 by Centre for Asia Pacific Aviation (CAPA) Air Asia. The airline also clinched the prestigious Euro money award for Asia Best Managed Company in the Airlines & Aviation Sector and Air Transport World’s Market Leadership Award at the recent 2005 Airline Achievement Awards.

If today, people complain that a $300 return ticket to Hong Kong is expensive, clearly, the bar for what constitutes value-for-money has been raised. And, all the credit for that goes to Tony. Since he started the Airline, he has received a lot of letters from people saying that he has inspired them, that they are going to try something different.“That is the biggest kick I get out of this whole thing,” says the high-flier.

Tony Fernandes – “Now Everyone Can Fly”
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