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We are here to prove a point, says AirAsia CEO

We are here to prove a point, says AirAsia CEO
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First Published: Sun, May 23 2010. 09 55 AM IST

Spreading wings: AirAsia chief executive officer Tony Fernandes. Ashesh Shah/Mint
Spreading wings: AirAsia chief executive officer Tony Fernandes. Ashesh Shah/Mint
Updated: Sun, May 23 2010. 09 55 AM IST
Mumbai: Tony Fernandes, 46 can be brash and loud, like many of his peers from the aviation industry. but for him, 2010 is for India. He wants to concentrate on snaring Indian passengers and is eyeing the Indian rail travelers, but says he wont commit a mistake by doing anything in a hurry. Starting his Indian adventure with a service to Tiruchirapalli, he says he’ll do things differently. Fernandes, who is of Indian origin and roots for Indian cricket team, has three airline companies flying into India from Thailand, Indonesia and Malaysia.
On Thursday, wearing his trademark red cap, he announced AirAsia’s first flight to Mumbai to Kuala Lumpur, and took everyone by surprise by announcing a Re1 tariff offer. AirAsia has reserved 30% of the seats, but he expects the remaining 11 tariff slabs to make money for his airline. He says he can never be a Naresh Goyal as ‘his “DNA” is different. And during recessions, his airline gets more ambitious. AirAsia has announced six direct flights to six new routes, including Mumbai, in the first quarter of 2010. If his plans go through as per schedule, AirAsia will be the only airline from Malaysia which will be flying to Bangalore and Hyderabad from Kuala Lumpur and from Penang to Chennai.
Edited excerpts.
Unilke other international airlines, you entered India through a secondary city Tiruchirappalli in India. Now you are connecting Mumbai as your sixth destination. Can you tell us the strategy behind this.
Spreading wings: AirAsia chief executive officer Tony Fernandes. Ashesh Shah/Mint
I think India is being wonderful experience. It took us seven years to get here, which shows how agressive is India, like we are. We are cautious too. If we have started too early, we would have chopped by this time. Rather than coming to Mumbai, Delhi and other metros, I think there is huge market in the secondary cities. I am here to prove a point. I believe the way Indian low cost carriers did business was wrong. There will be tremendous traffic by developing secondary market. So, Tiruchirappali was a great experiment. And it works fantastically. We have continued to started secondary destinations in South India.
Would you be open to floating joint ventures like you did in Thailand and Indonesia? Are you open to investing in India?
Currently foreign airlines are not allowed to do so. If it changes, yes I would like to. But probably the change may not happen in my lifetime.
You are operating in India under three different companies, but under one brand. Moreove, you are using fifth freedom, that is connecting India from Thailand. Many envy you on that arrangement. How did you manage this?
The idea was to have circles. Kuala Lumpur, one radius from Bangalore. May be if I had come from the aviation world, I wouldn’t have been able to do half the things that I did. So maybe the naivete, the simplicity and the will to get down and do it…
Did you lobby hard to get this?
I can probably start a political party now. Aviation is so political it is unbelievable . National carriers are almost like the flag of the country. No matter how cheap we are, the national carriers are always preferred. I don’t understand it. Banks are not like that. Car companies are not like that. For some reason national carriers are (a) phenomenal power.
You have ambitious plans for India, but you dont have much bilateral agreements left to explore India....
That’s another odd thing. Why there are bilaterals? It’s an odd thing for me. But the world is changing fast. Bilaterals are opening up. Governments that open up only by having a market oriented approach last.
What should one do differently in India to be successful?
I don’t know India that well. I don’t think I need to do anything differently. It is a big enough market for all of us.
Indian carriers are also pulling their socks to beat the competition? Do you think this will lead to a fare war?
I don’t want to talk about fare wars. I know reporters want to. But I think there is such a big market out there. There’s enough for all of us. The trick is to create new markets. As we have done with Tiruchirappalli.
We Indians passionately recall Re1 fare of Air Deccan founder Capt G R Gopinath. Though it created waves initially, those fares were not sustainable. How do you see this Re1 fare fares?
We will be offering this for a long time. That’s what we will live up to. What’s the difference between Air Deccan and us? One of us was a helicopter pilot. So may be Capt Gopinath shouldn’t have been a pilot. He did a great thing. It is a shame he (his airline) did not survive. He was good for India. He was innovative and tried doing too much and too quickly. And that’s why it is a risk. The one rupee fares are here to stay. We waited for Mumbai to launch one rupee fares and we’ll continue to launch a lot of promotions.
In that context, I would like to know where did India go wrong?
Where did it go wrong or where did it go right. I think it got right in liberalization. I think the government did a very good job in liberalization. Where it has gone wrong? Only in my end of the market (low fare carriers), people gave up too quick. And some expanded too quickly. The low cost market didn’t work here. You need a lot of determination and focus to make this work. It will definitely work here.
Given a choice which one you would opt for: A full load with promotional fares or half load with good yields? And what is the percentage of promotional fares such as Re1? And where does the money come from if you are offering more Re1 fares.
Would opt for the full load. I am a volume driven player. Thirty percent of inventory is for promotional fares. We have twelve baskets of fares. So, the profit will come.
What did you learn from recession?
Recession is good for Air Asia. We expand in recession. We are contrarians. Most people scale back during recession. We tripled our advertising money and added more capacity. Our biggest growth has been times of trouble. It has always worked for us. We focussed on marketing and took decision quickly.
Which is one international airline you would want to model?
Ryan air is the model we have followed.
What is one key challenge you would expect from Indian market?
We put on more flight very quickly . Otherwise Malaysian Airlines or someone else will do so. The challenge is that India is a continent. To do a good job, we have to put a lot of money in India.
You are emotionally attached to India?
My father is a Indian citizen. The first flight I took was to Kolkata. I remember arriving in Dum Dum airport when everyone was clapping. I was very depressed… buses were lined up.. but people were amazing.. When India plays cricket , I support India. It is another matter that Malaysia doesn’t have a team.
Any plans to start budget hotels in India?
We are planning 20 budget hotels in India. These hotels are under the brand of Tune Hotels.
You had a bet with Virgin Atlantic boss Richard Branson on the Formula One races?
Yes we have. Whoever wins the Formula One series, the loser has to be a stewardess in the other airline. So Richard Branson will dress up as a Air Asia stewardess and fly London to Kuala Lumpur. For me, he has kept London-Lagos. Right now I am winning three-one. So he sent me an email the other day and asked me to send him the measurements. So I replied that I’ll send him the (razor) blades because none of my stewardesses are allowed to have hairy legs. We are winning now but there are 14 races to go.
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First Published: Sun, May 23 2010. 09 55 AM IST