Skift Take

AirAsia CEO hopes to benefit with the rise of South East Asian countries, and a common visa scheme will be a huge booster to his company, and everyone in the travel ecosystem.

After the Asian financial crisis in the late ’90s much of Asia’s economic bounce back was powered by the juggernauts of China and India. When thinking of investing in Asia, everybody and their uncle was scampering to try and tap the huge markets in these two Asian giants. So when three Malaysian guys from the music business with no background in the aviation industry were thinking of steering an airline, we asked ourselves — did we really want to join the herd and were we in a strong enough position to engage in the frenetic industry competition in India and China? The answer was obvious.

When my partners and I took over a then-ailing airline called AirAsia from a government-linked company in December 2001, we had a very clear vision of what we wanted to build — an airline that would focus on the regional market rather than a national market and a company that would become synonymous with Asean, the region we call home.We launched AirAsia as Asia’s first low-cost carrier in January 2002 in Malaysia.

Given our philosophy of serving the underserved -encapsulated in our tag line of “Now Everyone Can Fly” — we looked around and realised that right there, in our own back yard, was an inherent potential few appeared to have spotted. Asean is a region of 600 million people. Even in 2002, it was already flashing signals of the economic growth coming it’s way. We believed then that as Asean’s millions gained more disposable income, they would take to the skies as long as there was someone providing affordable air travel.

The opportunities were huge. Asean is located in a part of the world where the countries are divided by large bodies of water. And not just from each other but within their own borders — Asean after all is home to the world’s two largest archipelagic nations, Indonesia and the Philippines. The most convenient way to get around was by air, as long as it was made affordable. Cue AirAsia. We set about building our “sky bridges” -which is what we call our routes — linking Asean’s communities, cultures and cities and recreating in the skies the sea routes that Asean’s peoples have been using for trade for millennia.

Now, just over a decade later, we are convinced that Asean is headed to even greater heights. The numbers speak for themselves: a region that’s 600-million strong, with a GDP that’s bigger than that of India’s. Plus the fact that demographically, we are in a very sweet spot, with a substantial majority of the population below 35 years of age.

The Asean Economic Community initiative and the Asean Open Skies initiative cannot come soon enough for us. Both are set to be implemented in 2015. Both are aimed at liberalising economies and liberalizing industries. The AEC is set to come into force Dec 31, 2015. No, I am not naive enough to think that come Jan 1, 2016, all trade barriers will come crashing down, that red tape and bureaucratic hassles will disappear, that non-tariff barriers will fade into the sunset and we will all be holding hands around the camp fire and singing Kumbaya.

But what the implementation of the AEC does is send a very powerful signal that Asean member states are committed to economic liberalisation. There’s no turning back, and while the process may take time to be fully realised, the momentum is unstoppable. The AEC will also mark a significant change in the way Asean operates. For the past 45 years, since its formation on Aug 8, 1967, Asean has been largely driven by governments. Necessarily so, in my view. The task of nation building by newly independent states is a government function. So was the task of restoring trust and confidence across borders.

The incremental steps Asean took to get to where we are now were crucial. But incremental steps are no longer feasible in a world moving at warp speed. The platform has now been constructed for a leap of faith, and that is exactly what Asean is taking with the AEC. Power is likely to become diffused. Governments will continue to play a key role, but the private sector will become much more influential. And the timing could not be better. Asean based companies used the time bought by their governments to build their size, their scope and their reach. Many of them are now in position to expand within the region, to be able to compete globally with the giants in their respective fields and to prosper the people of Asean.

In short, the region appears set for a bright shining future. Yes, there will be some setbacks (after all, who knows what Black Swans are lurking out there?). But Asean’s in-built resilience and the fact that Asean economies are now very much plugged into the global grid mean that Asean is set to soar. Much like how AirAsia has grown from a Malaysian brand to an Asean brand to a global brand, Asean, too, is now very much becoming a “brand” increasingly recognised in both the corridors of power and the chambers of commerce throughout the world. Not bad for a region whose member countries form a land bridge between the Pacific Ocean and the Indian Ocean — or a land bridge connecting the Old World with the New World.

Need more convincing that Asean is adapting, evolving and reforming in step with the current times? Just one word: Myanmar.

Tony Fernandes is the Group Chief Executive Officer of AirAsia, and one of the co-chairs of the World Economic Forum on East Asia in Nay Pyi Taw this week. 


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Tags: airasia, asean, southeast asia, visas

Photo credit: Richard Branson poses with AirAsia's CEO Tony Fernandes as he dresses up as a AirAsia stewardess in May, after losing a bet with his friend Fernandes. Vincent Thian / Associated Press

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