Hyderabad: Tony Fernandes is the founder and group CEO of AirAsia Berhad, Malaysia’s first low-cost or discount airline that has since expanded its reach to most parts of South-East Asia. Ahead of an imminent entry into India, he says that his airline has little to fear from the global economic uncertainty. Edited excerpts:
All over the world, airlines are in trouble. What has been the impact of the ongoing global financial crisis on AirAsia?
No, no, we are not affected by this slowdown. Because, there are various ways and means to deal with this recession and economic slowdown. AirAsia has taken aggressive steps to handle this. And we are making money too. Moreover, the oil prices are coming down. This will help us further.
Protected: Tony Fernandes. Udo Weitz / Bloomberg News
Credit is hard to come by. Are you saying it doesn’t affect you?
True, commercial lending is drying up. But, fortunately, we have lined up some private equity and European guaranteed funding.
So, what’s your secret recipe?
We always focused on right routes, right connections and right cost cutting. We have also formed a subsidiary, Air Asia X, to operate long haul operations, so that we do not dilute our low cost focus in flying short haul routes and low turnaround time. And, (there are) no frills added to our service.
What do you think went wrong for Indian low-cost carriers? Which low-cost carrier here do you think has followed the ideal model?
Indian carriers are not focused at all and there is not a single low-cost carrier in its true sense. There needs to be some discipline. In India, carriers are changing their business models frequently. For instance, Vijay Mallya started Kingfisher Airlines Ltd as a low-cost carrier and, later on, changed into a full service carrier.
For a low-cost carrier, you need to have a strong and focussed management, cost discipline and stricter focus. I still believe there is a huge market for a low-cost carrier (here), considering (India’s) one billion population.
India has 400 unused airports. There needs to be low-cost airports and low-cost terminals to support low-cost operations.
You need to have a management with a different mindset. The present management(s) do not have that kind of energy to?support?low-cost?operations.
For example, there are very (few) pilot training schools in India. Therefore, your pilots are very costly. India has rushed (a) lot of things without planning. Aviation is a hard business, but (it is a) good (one).
So, are you looking to enter India?
I hope we will start Indian operations by this year-end. I may start with Tiruchirappalli in south India. And this will be followed by Madurai, Delhi, Mumbai, Hyderabad and Chennai.
I see lot of potential for traffic in and out to Tiruchirappalli connecting Kuala Lumpur. Other Indian routes with more than four hours will be handled by AirAsia X Sdn Bhd.
The low-cost model is based on a homogenous fleet. But you have multiple types of aircraft.
True. But we are phasing out Boeing 737s from our fleet. But when you take Indian carriers, all have a mixed fleet except (a) few.