Transport Airlines

AirAsia Boss on Succeeding as a Low-Cost Carrier in Southeast Asia

Aug 11, 2014 3:00 pm

Skift Take

Southeast Asia’s biggest challenge is creating an infrastructure to support this rapid growth.

— Jason Clampet

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Bazuki Muhammad  / Reuters

Malaysia's AirAsia Group CEO Tony Fernandes speaks during a news conference at Forbes Global CEO Conference in Kuala Lumpur. Bazuki Muhammad / Reuters


After experiencing ups and downs — literally and figuratively — since its birth 13 years ago, AirAsia Group is strengthening its regional-connectivity strategies to deal with ever-tougher competition in many countries, including Thailand.

Tony Fernandes, founder and group chief executive officer, said AirAsia saw very positive prospects for the air-travel industry in Southeast Asia.

“The region’s Asean Economic Community is becoming the words that people talk about. The open-sky policy here has now actually opened,” so everyone wants in on the action. AirAsia Group operates in more than half of the region.

Fernandes stressed that he was not afraid of competition despite the rising number of low-cost carriers. Thai Smile, for example, is moving its operation to Don Mueang International Airport, the home of Thai AirAsia.

“I’m a free marketer, so I’m not afraid of competition. And fair competition gives consumers choices,” he said.

In its 13 years of operation, the budget airline group has served more than 200 million passengers, and more than half of them were first-time fliers. The group believes that there will be a lot more first-time customers in the region.

To deal with such a great opportunity, the group is moving aggressively on its internal management. It is focusing on cost management, the organisation’s culture of transparency, pilot efficiency and intensive training. The airline is doing a detailed study on how to lower costs to the minimum while maximising earnings.

Furthermore, there’s no ego at the company, no union, and just one family. These factors have helped the airline deal with many crises over the past 13 years.

More important, it is focused only on the keys to its success that it has used since the start, one class and one fleet. But it has also needed to rebuild its brands by using the right planes for the right market. Therefore, AirAsia X is different from the standard AirAsia model.

Fernandes said Thailand was always a key place for the group’s further expansion, as the country is the most popular destination for tourists. Any new move by the company always considers Thailand.

However, separate airports for low-cost and full-service airlines are needed in Thailand.

“Don Mueang Airport is the best low-cost airport in the region,” he said.

However, the government should prevent overcapacity, and fees should be reflective of the airport’s facilities.

Now 50 years old, Fernandes said he planned to begin operating low-cost hospitals and educational institutes 10 years from now when he turns 60.

He was in Bangkok for an internal meeting, on the same day that Thai Smile made its inaugural flight from Don Mueang Airport. He also met with National Council for Peace and Order deputy chief ACM Prajin Juntong, to discuss the travel situation and future cooperation to boost Thai tourism.

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