Low-cost is a religion, says AirAsia boss<\/p>\n
Starting out in 2001 with only two aircraft, Malaysian budget
\ncarrier AirAsia has now spread wings to most big cities in
\nSoutheast Asia to become a prominent player in the region. The
\nJakarta Post's Anissa S. Febrina talked last week in Jakarta with
\nAirAsia CEO Tony Fernandez on his views of the sector in
\nIndonesia and region generally. Following are excerpts from the
\ninterview:<\/p>\n
Question: How do you manage to be a low-cost airline and stay
\naway from problems of maintenance currently under the spotlight
\nin Indonesia's airline industry?<\/p>\n
Answer: I do not think that there are any LCCs (low-cost
\ncarriers) in Indonesia. If you look at Lion Air, they have a
\nbusiness class, they give food, AdamAir also. These are low-fare
\nairlines, they are not really low-cost.<\/p>\n
We are recognized as being very efficient in maintenance.
\nTrying to use the same type of airplane is one of them.
\nMaintenance is done with the best provider (AirAsia struck a deal
\nwith Singapore ST Aerospace in 2002.)<\/p>\n
We are very comfortable with our standards and the best way to
\nlook at it is our insurance rate. It is one of the lowest in the
\nworld. If our insurance was high then people would be worried. It
\nis only because in everyone's mind, when you give a Rp 99,000
\n(about US$10) fare people are worried about safety, especially in
\nyour country where there have been a number of incidents.<\/p>\n
I think the best way to show our safety is through the
\ninsurance company. If they have no confidence in our ability to
\nfly planes safely, they would not insure us.<\/p>\n
Could you elaborate more on low-fare and low-cost?<\/p>\n
I think low-cost is a religion. It is a discipline and a focus.<\/p>\n
It is not getting side-tracked. Not trying to be something
\nelse. Giving passengers the lowest possible fare, and being the
\nmost efficient and the safest ride.<\/p>\n
I operate with the simplest and smallest airlines office in
\nKLIA (Kuala Lumpur International Airport), to avoid the
\nunnecessary cost. Another thing, for instance, is that we choose
\nto land in Macau instead of Hong Kong because we can get lower
\nairport fees there.<\/p>\n
Low-fare is more like trying to be low-cost but trying to do
\nother things as well; giving some food and extra services. We
\nthink, in the end, let consumers choose. Give them the lowest
\nfare. If they want food or extra luggage, they can buy it. Give
\nthe basic travelers the lowest possible cost. It is very much a
\nreligion and it is very much our corporate culture.<\/p>\n
What are the current challenges of developing the business?<\/p>\n
The biggest challenge I have is ASEAN itself. I find sometimes we
\nare our own worst enemy, rather than supporting each other. I am
\ntrying to build an ASEAN brand, not Malaysian, Indonesian or
\nThai.<\/p>\n
One day there maybe an ASEAN newspaper and there will be
\ncompanies like us advertising because we will reach all the
\nmarket we want. There are already ASEAN banks coming together.<\/p>\n
But, sometimes the regional rivalry is our own worst enemy.
\nLook at Singapore. Today they talk about open skies with
\nMalaysia, but I cannot get a bus (between the two countries). So
\non one side there is open skies, but on the other closed roads.
\nYou cannot selectively have competition. You have to have it all
\nthe way.<\/p>\n
If we work together we will have a huge market. That is the
\nchallenge, to be welcomed by all of ASEAN and to be seen as an
\nASEAN brand.<\/p>\n
Other challenges, well, we have been through it all. We have
\nhad bird flu, SARS, earthquakes, tsunami. I am very optimistic. I
\nlove the growth. We have our new planes coming in. (AirAsia set a
\ndeal to order 80 new Airbus planes earlier this year.) We would
\nhope to do about 10.5 million passengers next year.<\/p>\n
The airline business in Indonesia has been emerging, but it is
\nrather unstable. What's your comment on this?<\/p>\n
I think it is a fantastic market, enough for everybody. But I
\nthink airlines here waste too much time trying to compete with
\neach other. They are always looking over their back. They spend
\ntoo much management time trying to kill others and trying to be
\ndestructive.<\/p>\n
Like I said, I do not worry about competitors. Our enemy is
\ncost. I believe a lot of management time is wasted on trying to
\nstop others rather than fixing their own business. Indonesian
\nairlines are in a great time. There is still great potential.
\nThere are many places that should be connected that are not
\nconnected. Like Lombok and Makassar, it should be a great tourist
\nplace. We would develop Lombok for sure.<\/p>",
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