How Air Asia founder Tony Fernandes'

dream came true

Former music executive Tony Fernandes bought an ailing airline for 25p and transformed it into Asia's first low
cost, long-haul carrier
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Start-up Stories

Agatha Ruiz de la Prada

Rosaria Piseri, AlgAran

Niki Koutsianas, Apivita

Rose Gong, Jiayuan

W atch

When the music industry failed to adapt quickly to the internet, Tony
Fernandes decided to make a clean break. He left his job to pursue a
childhood dream: set up an Asia's first low cost airline.
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Air Asia
Turnover: $1bn (2009)
Number of employees: 8,000
HQ location: Kuala Lumpur, Malaysia
Year founded: 2001
Ownership: Listed on the Malaysian stock exchange

Mr Fernandes bought Air Asia from a Malaysian government-owned company in

September 2001 for a mere 25 pence.
"When the music business failed to embrace the internet, I thought it was game,
set and match for the industry and I quit," he recalls. But he had no experience of
running an airline.
"It really was a little bit of stick your finger in the air and hope for the best. But we
were good marketing people from the music business we just went out there
and felt the market and said if you halve the fare, there's a huge enormous
untapped market."
Air Asia was heavily indebted at the time. Fernandes set about reforming the
airline as a short-haul low cost carrier, similar to those operating in the West. The
decision revolutionised short-haul flights around Asia and Fernandes saw his
business expand rapidly.
The company grew from two planes in 2002 to a fleet of 86 aircraft flying 30
million people around the world.

Separation
He puts the turnaround of the airline down to 'culture, focus and discipline'.
Mr Fernandes believes the trick is to be single-minded about the operation and to
keep it simple. After the success of Air Asia's short-haul flights he expanded into
long haul journeys with a new airline, Air Asia X.
The result was two separate companies, one dedicated to low cost short-haul
flights, the other focusing on long-haul routes.
There are "two separate management teams, two separate marketing teams, and
the two brands Air Asia and Air Asia X." The separation continues even on the
plane.
"We have two separate sets of crew, two separate sets of pilots and engineers.
So it's a very different culture but they're symbiotic without being parasitic and
being on top of each other," he explains.
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If you sit up in your ivory tower and just look at financial reports, you're going to
make some big mistakes.
Tony Fernandesgroup chief executive, Air Asia

Despite this, the two airlines utilise a similar modus operandi: efficiency is key to
keeping up with demand and ensuring a healthy profit-margin.

"Turnaround [of planes] is very critical. We do a lot of practising on doors, on the

cabin crew, helping people sit down quickly and clearing the aisles."
Mr Fernandes first envisioned cheap flights across Asia as a young boy. Being at
boarding school in Epsom in southern England far from his childhood home in
Malaysia meant that half-term visits were out of the question.
"I always dreamt about doing a long haul low-cost airline," he remembers. "For
my first ever flight in Air Asia X, I refused to do the launch to Australia and China
and everyone thought it was a bit odd. But I wanted my first flight to be LondonKuala Lumpur."
"It was very emotional for me 35 years on."

Ground experience
Fernandes adopts a 'walk around' management style.
"If you sit up in your ivory tower and just look at financial reports, you're going to
make some big mistakes."
For a few days every month he works on the ground or in the cabin crew. He
says he's learned a lot from working on the airline himself.
"When we moved from the 737 to the Airbus, the Airbus is slightly higher off the
ground and my guys said we need belt loaders. It would have cost us about a
million US dollars. We used to just put the bags manually into the cargo hold on a
737."
So Fernandes turned the idea down. But on his next stint working alongside staff,
he says he almost 'broke his back' loading the plane.
"I said 'Ron, you're right, we'll get belt loaders' I made the decision
instantaneously.' He says that without the experience, "I could have made a
decision - a very wrong decision that damaged a lot of people and destroyed the
morale of the organisation at that level."

Employees before customers

Air Asia and Air Asia X fly to 13 destinations in Asia,

Europe and Australia

Fernandes says that to him "employees come number one, customers come
number two. If you have a happy workforce they'll look after your customers
anyway."
"We have a culture department whose sole job is to organise parties."
He has been known to search out new staff in queues. "I look for people who
have drive, who have ambition, who are humble. I've hired many people at very
strange places."
"You can have all the money you want in the world, and you can have all the
brilliant ideas but if you don't have the people, forget it."

Succession planning
But Tony Fernandes admits that despite this, being a central presence in an
organisation can have an inhibiting effect.
"The one bad thing about Asian companies and family owned companies and
those started by entrepreneurs is: when do they move?"
"Good leadership is to know when to go and you only succeed as a good leader
if you've transported someone else in and the company gets stronger. Then
you've succeeded as leader."
The founder of Air Asia says he's not about to leave just yet, but is certain he
won't make that mistake.
"We're nine years old and there's a few things more that have to be done but
there are lots of young people coming in, lots of energies coming in. I'm very,
very confident that when I do go, and my sell-by date does come, the company
will still grow from strength to strength and then I would have said I've
succeeded."
http://www.bbc.co.uk/news/business-11647205