Right in tune Group has wide-ranging businesses

07 November 2009

THE Tune group of companies, with its panoply of businesses (and growing, no doubt) has literally painted the town red.

But while the trials, tribulations and triumphs of AirAsia group has been widely documented, those of his other businesses take a back seat in the limelight sphere, although their complementary features to the flagship airline business and low cost ethos is hard to ignore.

“They are all making money,” says co-founder of the group Datuk Seri Tony Fernandes. “The AirAsia and Tune groups have really become a lifestyle.”

“You travel, you require a hotel. You spend a lot of time in financial transactions – buying insurance and using credit cards, and you spend a lot of time talking on your mobile phone,” he explains.

The Tune group is Fernandes’ brainchild as he turns to crafting a niche in serving the underserved mass market. The businesses under the Tune banner encompass hotels, financial services, mobile phone service, sports, property, retail and entertainment. The more significant entities in the stable are Tune Hotels.com Ltd, Tune Money Sdn Bhd and Tune Talk Sdn Bhd.

Value stay

According to Fernandes, a large percentage of the guests that lodge at Tune Hotels are passengers from AirAsia. And that is only understandable, considering that they are sister companies, and that AirAsia has already done most of the branding ground work for the Tune group.

The budget hotel chain currently has seven operational hotels, five of which are in Malaysia and two of which were recently opened in Bali, Indonesia.

Business has been brisk, with the five hotels in Malaysia reportedly registering occupancy rates above 90% and having an average of 60,000 guests monthly. The corporate sector reportedly contributes around 30% to 40% to its business.

Tune Hotels is now focused on expanding its brand to other countries in Southeast Asia such as Thailand and the Philippines, and to South Asian countries such as India and Bangladesh. It is also in the process of seeking to form the right partnership to expand to China.

In India, Tune Hotels has a strategic tie-up with Apodis Hospitality Group to develop and operate up to 70 Tune Hotels in India over a seven-year period.

Money talks

Tune Hotels over the week announced that it planned to open its first hotel in Melbourne by October next year. This is part of its target to have 64 operational hotels by the end of 2013.

Fernandes holds a 13.93% stake in Tune Hotels, and some indirect interests via Tune Ventures Sdn Bhd that holds a 29.35% in the budget hotel chain. Other shareholders include prominent individuals Datuk Seri Kalimullah Masheerul Hassan (10.7%), Lim Kian Onn (10.7%) and Datuk Kamarudin Meranun (10.45%), as well as Japan-based financial services conglomerate Orix Corp (10.62%) and Singapore-based private venture capitalist East Pacific Capital Pte Ltd (8.7%).

Getting itself back on the growth track, Tune Money, which is currently consolidating its business operations, is set to expand its product offering and establish its presence overseas next year.

Among the new products in the pipeline, as Fernandes reveals, could be an AirAsia/Tune card, whose benefits include the enablement of passengers to do touch-and-go transactions on AirAsia flights.

According to Fernandes, the no-frills online financial service provider is targeting to generate revenues of RM25mil next year.

“Business is good – the insurance and card businesses are growing very rapidly,” he says, adding that he believes Tune Money could generate about RM10mil this year.

It has been reported that Tune Money is in talks with several companies for corporate and branding strategies to grow its customer base. It is also in talks with several possible partners to realise its aspirations of venturing into Indonesia and Thailand next year.

Fernandes owns direct interests of 9.95% in Tune Money, and indirect interests via Tune Ventures, which holds a 34.16% stake in Tune Money. Other shareholders include CIMB SI II Sdn Bhd (25.69%), Kalimullah (8.44%), Lim Kian Onn (8.44%) and former Tune Money CEO Tengku Zafrul Tengku Abdul Aziz (7.48%).

Talk is cheap

A new kid on the block in the mobile telephony industry of Malaysia, Tune Talk, which was launched in August this year, is already talking about taking its services to the Singapore space next year.

The company is currently in preliminary, but encouragingly progressive, negotiations with two mobile operators in the island republic for the possible venture to realise its aspiration of becoming a pan-Asean mobile virtual network operator.

“Tune Talk is a massive success,” Fernandes says, based on the fact that the company had managed to secure 100,000 subscribers in the local market in just 1½ months of its launch.

Rolled out as a prepaid service with the prefix “010”, Tune Talk offers a no-frills voice and short messaging service (SMS) package that targets the underserved segment.

Fernandes is confident that Tune Talk could see its business turn around next month. “We have just started … but we’re ahead of schedule,” he says of the performance of the company.

It is estimated that Tune Talk is adding an average of 3,000 new subscribers a day. The company’s target is to hit one million subscribers within one year of its launch.

Celcom Bhd controls the largest equity stake in Tune Talk with over 38%, while Tune Ventures holds a 35.7% stake. The remaining shares are held by Tune Strategic Investments Ltd, and various individuals, including Tune Talk CEO Jason Lo, Kalimullah, Lim and Lankester.

Fernandes says the Tune group, as well as AirAsia X Sdn Bhd, are all handled by “very competent CEOs”.

“I don’t get directly involved in those businesses. I am just a sounding board member,” he explains, adding that his mainstay is still the short-haul business of AirAsia Bhd.

Sounding board member he is, and Fernandes, who has already become a legend of sorts in the aviation industry (he was recently conferred the Capa Legend Award for 2009), is set to establish a new benchmark in the no-frills playing field.

AirAsia, the Tune business is already dominating the no-frills space of Malaysia, and it looks set to take the Asean market by storm, and then that of Asia and the Pacific. With these achievements - whether by direct or indirect involvement – the award-winning entrepreneur is a living testimony that it is by dreaming big that could lead one to great

AirAsia's convenience fee for value-added services

05 November 2009

We refer to the letter AirAsia's 'convenience fee' a rip-off.

AirAsia very recently imposed a convenience fee for online credit card payments. This fee is meant to recover costs in implementing, upgrading and maintaining our online payment systems. It subsidises but does not cover the full costs of the related systems.

It is also to enhance security features for credit card payments to give guests a comfortable and safe booking environment. The convenience fee is neither a surcharge for use of credit cards nor an administration fee.

In the past, we absorbed these costs. However, now that AirAsia is experiencing a rapidly growing number of online transactions, these costs have significantly increased.

This convenience fee is charged on a per way per guest basis because the costs of these systems are driven by the value of the transaction rather than by the number of transactions. As costs vary per country, the convenience fee also varies.

Contrary to the writer's spurious allegation, the convenience fee is not only legal but an accepted industry-wide practice. Several other airlines, both legacy carriers and low-fare carriers, have imposed such fees, which the writer could have confirmed with a little bit of research. In fact, our fees are the lowest in comparison with those airlines.

AirAsia has other payment channels that do not impose the convenience fee. The fee is not imposed on transactions using direct debit, E-Gift Voucher and credit shell. Neither is it imposed on transactions made through the call center, at airport sales counters and at sales offices where the normal service fee applies.

The writer's allegation that AirAsia 'decided to sneakily slip' the convenience fee into our charges is unfounded. Our online booking system clearly shows that we impose a convenience fee.

His accusation that AirAsia guests get to know about the convenience fee only after they enter their credit card details is false. Information about the convenience fee is reflected on our
website, right above and before the portion asking guests for payment details.

As for the contention that the convenience fee is being imposed because of AirAsia's financial situation, we believe that this is an unfounded allegation. AirAsia has been consistently profitable in its operations since the new management took over in 200 1.

The only year in which the airline suffered losses was in 2008, due to the volatility in fuel prices and our decision to unwind our fuel hedges and buy fuel on the spot market. This courageous move by the management has since proven to be the correct one given that other airlines are still sitting on huge losses because of their hedged positions on fuel.

AirAsia has been praised by analysts and experts for its transparency on this issue. AirAsia, though effective business planning and implementation, has contributed positively to the growth of Malaysia and the Asean region.

We have developed tourism and helped mitigate the impact of the economic crunch on the local economies. We have served countless communities with our low fares. By winning accolades in the aviation and tourism sectors, we have done Malaysia proud.

It is unfortunate that the writer appears to have overlooked the positive impact of AirAsia and instead chosen to launch a scurrilous attack on our company for reasons best known to himself.

The writer is regional head, Communications AirAsia.

AirAsia's 'convenience fee' a rip-off

05 November 2009

For some time now, AirAsia has been trumpeting the fact that customers only pay for their flight ticket costs and taxes. Its website loudly proclaims, 'No Admin Fee, No Fuel Surcharge, All Destinations!'

Indeed, this fact is clearly seen in white reverse on a big red banner at the bottom of its main website and at various points during the online booking process.

Thus, imagine my consternation to discover that AirAsia recently decided to sneakily slip into its ticket charges a clandestine 'convenience fee' of RM5 per flight if one books a ticket via credit/ debit card! Excuse me but what 'convenience' exactly does this 'fee' give to those who buy tickets online?

It's only after you enter all your credit/debit card details when purchasing tickets in their web- booking system that the 'convenience fee' suddenly appears.

AirAsia defines this 'convenience fee' as follows: 'Convenience Fee: Please take note that this fee is chargeable at 5.00 MYR per passenger for each way when payment is made through credit card or debit card only'.

Which really is not much of an explanation. Instead, it's just rhetoric, a vacuous statement reminiscent of unscrupulous retail traders charging their clients an extra service charge of between two to five percent on top of their advertised prices in shops – a sales tactic that is not only blatantly misleading and unfair but arguably illegal since businesses and their banker friends already make huge amounts of money from credit card users.

Pray tell AirAsia, has this charge been approved by the ministry concerned? Is it even legal? And why now when travellers have been purchasing tickets online ever since Day One of AirAsia's launch over eight years ago? Why no 'convenience fee' previously?

Or is it because AirAsia is now trying to re-coup its desperate corporate losses from its loyal (and some would say 'long-suffering') customers given AirAsia's inability to turn a profit on its business model due to overly ambitious expansion plans and shortsighted fuel-hedging policies?

Honestly, given the lack of competition and fair trade in Malaysia, we ordinary travellers and consumers suffer a lot of abuse. And it's these kinds of sneaky business practices that really see AirAsia test the goodwill of its patrons who want to see the airline succeed for the long term.

It's practices like this clandestine 'convenience fee' that demand the government enact a Fair Trade Act (like the one in Australia) that genuinely protects consumers from all unfair trade practices.

It is already irritating that the government has imposed a RM50 fee on all credit cards in the latest budget; a cockeyed 'one-size fits all' measure that punishes innocent and prudent credit card users along with all those who don't know how to manage their finances.

AirAsia's sneaky 'convenience fee' thus not only adds insult to the injury of all credit/debit card users but also seeks to emulate the government's cockeyed one-size fits all approach of making travellers pay for the corporate bungles of its over-ambitious management.

It is also time we had a genuine open skies policy in Malaysia so that air travellers may receive value for money by benefitting from genuine competition in budget air travel.

And scrap the 'convenience fee'. It's just another rip-off!

New flights from Air Asia

04 November 2009



Succeeding in launching flights from Jakarta-Bangkok and Bali-Bangkok in December 2009, now Air Asia is adding more flights Jakarta-Phuket and Medan-Phuket. The new flights are officially launched by Thailand ambassador, YM Akrasid Amatayakul accompanied by Chief Executive Officer Thai Air Asia, Tassapon Bijleveld, in Jakarta, Tuesday (11/3).

YM Akrasid Amatayakul stated that Thailand takes the new flights appreciatively because they connect directly to Phuket beach, one of famous international tourist destinations in Thailand. The famous pearl of Andaman Seas is located in Phuket.

“We are happy to launch this new flight. This will make closer the two countries (Indonesia-Thailand) relation, increase trading and tourism cooperation. Jakarta is one of the leading cities as a center of trade and tourist destination in Indonesia. Jakarta has a competitive power in Southeast Nations. Meanwhile Medan is a potential commercial area,” he said.

Tassapon Bijleveld explained that Air Asia always try to fulfill the market need. That’s why it adds new flight by keeping good services.

"Jakarta-Phuket and Medan-Phuket flights are held once in a day,” he continued.

Marketing Director Indonesia Air Asia, Widijastro Nugroho explained that there are 136 flights including the new one. There are five flight centrals in Indonesia: Jakarta, Bali, Bandung, Surabaya and Yogyakarta.

"We fly 3.5 million people annually. With the new flights, we target 5 million people per year,” he said.

The new flights have online fare Rp 199 thousand (Jakarta-Phuket flight) and Rp 99 thousand (Medan-Phuket). For those who own Air Asia HSBC credit card, you only have to pay Rp 99 thousand (Jakarta-Phuket flight) and Rp 49 thousand (Medan-Phuket).

You can order the ticket starting from 4 to 9 November 2009 for the flight date 3 December 2009 to 30 April 2010.

“We use airbus A320 for those flights," he said.

Asian hotel chain eyes Melbourne

04 November 2009

A NASCENT Asian budget hotel chain aims to open its first hotel in Melbourne within a year, as part of big expansion plans. Tune Hotels, founded two years ago in Malaysia, has seven hotels operating in South-East Asia, with 64 more under development, most in Asia - and Melbourne is firmly in its sights.

The chain works closely with low-cost airline AirAsia, which already operates into Australia, including 11 flights a week to Melbourne.

Tune's group chief executive, Mark Lankester, speaking during a recent visit to Melbourne, told businessday he had been investigating several sites around the city. ''If we can't buy land, we buy an existing building and convert it,'' he said.

While describing prices in Melbourne as steep, Mr Lankester said the aim was to be open for business by next October.

''The Australian market is superb, and Melbourne is a fabulous city. It makes a lot of sense to be here. People can fly very affordably. We aim to break into Melbourne and then Perth,'' he said.

Mr Lankester, a Malaysian citizen, previously ran Warner Music in South-East Asia. He was persuaded to lead Tune Hotels by Tony Fernandes, the founder of AirAsia. The two men were previously colleagues at Warner Music - hence the name ''Tune''.''

Tune's pricing structure is demand-driven: the earlier you book, the cheaper prices you get. The emphasis is on full occupancy.

As well, the company markets its ''green'' credentials, and guests pay extra for using energy-consuming things such as air-conditioners.

The cheaper rates are also bankrolled by advertisements, with ads in all hotels.

Living out a dream

01 November 2009

PETALING JAYA: For someone who has no affinity to racing cars in his schooling days, Riad Asmat is about to take up the challenge of leading the operational side of the newest team on the Formula One grid.

The 38-year-old was named as the new chief executive officer of the 1Malaysia F1 Team on Friday and will be reporting directly to the team’s main backer, Datuk Seri Tony Fernandes, who is also the AirAsia chief executive officer.

Feather in the cap: Fernandes putting the team cap on Riad after announcing the latter’s appointment as CEO on Friday. — Reuters

Riad may be young and small in stature but he certainly comes with strong credentials.

He worked with Sepang International Circuit (SIC) and Nike before joining Proton where he was attached to the managing director’s office as a general manager prior to his current appointment.

Riad said he was attracted to Fernandes’ proposition to live out the dream of seeing a Malaysian team make it in Formula One.

“Datuk (Tony) wants to see Malaysians living out their dreams and to him, nothing is impossible.

“It is not easy to get a place in the grid for the Formula One world championship and it involves a lot of parties. Now that he has created this platform, he wants to invite people with the right talents to join in the dream.

“I have always wanted to try out new challenges and this was his proposition to me ... that it’s better to have tried than regretting it later if we had not taken the first step,” said Riad, who was more into rugby in school.

“I had to stop playing rugby on the doctor’s advice after I had a concussion. I also tried horse riding and golf but stopped as I was not good at it.

“I was not really into racing cars like kids today who are familiar with Formula One. I’m more into cycling these days to keep myself fit,” said Riad, who has a Masters degree in Organisation and Communication from Western Michigan University in the United States.

It is a plum job to be associated with Formula One but Riad has his work cut out for him, namely, to steer the fledgling Malaysian team and make an impact in the Formula One racing and in the process, generate greater patriotic interest.

All these are also expected to generate economic spill overs for the country via endorsements, pro­motions, advertising and tourism.

And that means less quality time to spend with his wife and three children.

“Right now, I am still working from home as our new office at the SIC will only be ready later this month.

“It’s going to get busier when the Formula One season starts in Bahrain in March but I have accepted the challenge and the work load that comes with it.

“It probably has not sunk in yet but it’s not going to be easy getting things to run smoothly initially.

“But like Tony said, we will be there on the grid in March and everyone is chipping in to make the dream come true.”

Air Asia Flight Increase Good News for Irish Freight Handler

30 October 2009

IRELAND – News that Air Asia X - the low-cost long haul arm of Malaysian carrier Air Asia – has increased frequencies and included a new destination to its winter 2009 schedule has been greeted warmly by its Irish cargo agent IAM.

Though the airline does not fly to any Irish destinations IAM is able to connect to the carriers Stansted gateway using nightly express truck services.

IAM’s Managing Director, Ian McCool, says that: “Ireland’s continuing focus on airfreightable commodities such as pharmaceuticals means that every new carrier and destination is welcomed. The market was therefore very receptive to Air Asia X.

“The addition of these new frequencies and a further key destination represents a significant enhancement to the service we are offering”.

Air Asia X has boosted its services from its Kuala Lumpur hub with both a new service to Chengdu in China and additional flights to Australia’s Gold Coast. It has also announced that from December it will be adding four more flights per week to its Kuala Lumpur-Melbourne service, bringing flights to a weekly total of 11.

IAM was appointed to represent Air Asia X in March, when the airline commenced its first long haul services from London (Stansted) to Kuala Lumpur, which now operate daily. Since then, IAM has seen steady growth in traffic for the airline’s network.

AirAsia sees strong passenger load

30 October 2009

Group CEO says carrier is ‘not yield driven but volume driven’

PETALING JAYA: AirAsia Bhd, which has steadfastly widened its reach to new markets even as the financial crisis was unfolding, expects its passenger load factor to remain robust next year, according to group chief executive officer Datuk Seri Tony Fernandes.

“Our business is great. Our passenger numbers are up even during the puasa (fasting) month. Ancillary incomes are coming up very fast and we’re getting rights to many destinations,” Fernandes told StarBiz.

AirAsia’s load factor stood at 75% in the second quarter ended June 30. He said given the green shoots of economic recovery, yields were likely to improve and that things were not as gloomy as they were a year ago.

As such, “we are in a better position” now. However, he pointed out that the airline was “not yield driven but volume driven. That’s the key to a low-cost carrier (LCC).”

Datuk Seri Tony Fernandes ... ‘Ancillary incomes are coming up very fast and we’re getting rights to many destinations.’ - Filepic

In keeping with its aggressive route expansion, Fernandes said by year-end, AirAsia would add seven more routes to India.

It currently flies to four Indian destinations – Kolkata, Kochi, Tiruchirappalli and Trivandrum. It would continue its expansion mode next year as well, he said.

The carrier has deferred taking delivery of a third – or 16 of 48 – aircraft originally scheduled for 2010 and 2011 due to doubts over the timely completion of the new LCC terminal.

On whether this move might limit the airline’s capacity to tap the opportunities if there was a strong uptick in demand for air travel, he said it would be highly unlikely.

“We’ve got 82 planes! And we’re still getting deliveries. But if that’s the case, then it will just push our yields up.”

In a filing to Bursa Malaysia yesterday, AirAsia said it did not have to pay any penalty for the revision of delivery dates for eight Airbus A320 aircraft, initially scheduled for delivery in 2011 to 2014 and 2015.

The deferment is because it “foresees infrastructural constraints with the current airport facilities” and needs to “optimise its fleet and avoid the costs associated with leaving idle or under-utilised aircraft” due to such limitations.

The carrier had signed an amendment agreement with Airbus SAS for the revision. Under a purchase agreement signed in 2005 and a number of amendment agreements, AirAsia had agreed to a firm order of 175 Airbus A320 aircraft.

AirAsia said the original number of deliveries in 2014 would be increased from 18 aircraft to 24 whereas, in 2015, the company would take delivery of two aircraft as opposed to none from before.

AirAsia had much earlier unwound its fuel hedges, a stance Fernandes said the airline would continue to adopt for a while, even as crude oil prices might rise next year on the back of an economic recovery.

“Even if it (oil price) reaches US$100 per barrel we’re ready for it. We are okay at the moment,” he said, pointing out that the budget carrier had overcome the turbulence even when oil prices skyrocketed to a high of US$150 a barrel.

Over the last two weeks, crude oil had been trading around US$79 a barrel, touching a high of US$81.37 last Wednesday.

“Fuel price is a fake price. Eventually it (price) will settle on real demand,” Fernandes said, adding that it was also painful to hedge sometimes, especially given the high volatility of oil prices.

As such, he said that although AirAsia might remain “naked” or unhedged, it might hedge some fuel requirement over three- to 12-month contracts.

Although there were green shoots of recovery, the economy still remained fragile, he said.

Last year, fuel prices fell sharply from US$145.29 a barrel in July to a low of US$33.87 in December. AirAsia had unwound huge hedging contracts in the third quarter last year that led it to post its first quarterly loss of RM465.5mil since its listing in 2004.

Since then, AirAsia has not got into new hedges. In any case, Fernandes said, fuel hedging only offered short-term benefits. “What we have to do is to build a sustainable business.”

Spring Airlines keen to work with AirAsia X

30 October 2009

But the latter does not see any chemistry between them

BEIJING: China’s No.1 privately-owned budget carrier Spring Airlines wants to work with AirAsia X but the latter does not see any chemistry between them.

Spring Airlines chairman Wang Zhenghua could not hide his disappointment that he could not meet the AirAsia X boss even once.

“If I put it in a not so nice manner, they seem evasive. We invited them for a meeting and tried to see them. But, every time we tried to meet, they did not want to see us,” he told reporters at the Aviation Outlook Asia conference here on Wednesday.

»Spring Airlines needs to understand we are not interested in interlining code-sharing of flights« AZRAN OSMAN-RANI

Wang said his company really wanted to collaborate with the Malaysian carrier and share flight resources. He said both low-cost carriers could combine routes in China and South-East Asia to expand their passenger base.

AirAsia X chief executive officer Azran Osman-Rani said his company was not looking for any profit or code-sharing model if it were to cooperate with other airlines.

“I think Spring Airlines needs to understand we are not interested in interlining code-sharing of flights. We prefer to cooperate on the basis of doing simple marketing such as I tell my passengers they can fly to Shanghai (by Spring Airlines) and you tell your customers they can fly to KL (by AirAsia X),” he said.

Azran added that the interlining code-sharing incurred costs as it required both parties to connect to each other’s system and AirAsia X wanted to keep its operational cost low.

Shanghai-based Spring Airlines flies to almost all major cities in China while AirAsia X has routes from KL to seven Chinese cities – Haikou, Shenzhen, Guangzhou, Tianjin, Hangzhou, Chengdu and Guilin.

Capa award winner Fernandes an aviation Legend

29 October 2009

BEIJING: Datuk Seri Tony Fernandes is now a legend of sorts — the AirAsia group chief executive officer was conferred the Capa (Centre for AsiaPacific Aviation) Legend Award for 2009, the youngest receipient so far.

To add another feather in his cap, the Malaysian low-cost carrier and its long-haul budget airline AirAsia X walked away with the prestigious Airline of the Year Award.

Fernandes said it felt “odd” to win the big individual award and joked that maybe the judges were giving him a signal that he should be on his way out of the industry.

“It’s a great honour for me and the company. I would be lying if I said I am not happy. You would be a legend only because of the people behind you,” he told The Star after the award presentation held here last night.

Fernandes said he was pleased that his fairy-tale success in introducing a budget carrier had given a lot of motivation to children and university students to believe in their dreams.

The Capa Legend Award (Aviation Hall of Fame) is given to outstanding individuals who bring about a revolutionary force in the aviation industry.

He said the award proved that Malaysian companies were capable and to win during a time of financial crisis meant even more for AirAsia.

Capa executive chairman Peter Harbison said Fernandes was the youngest inductee into the Hall of Fame, but his impact on Asia Pacific aviation had been profound.

Airasia Revises Delivery Of A320s

29 October 2009

KUALA LUMPUR-- AirAsia Bhd has signed an amendment agreement with European airplane maker Airbus to revise the delivery dates of eight A320 aircraft originally scheduled for delivery in 2011 to 2014 and 2015.

In a statement to Bursa Malaysia Thursday, the regional low-cost carrier said with the deferments, the original delivery of 23 aircraft in 2011 would be reduced to 15 aircraft.

The original number of deliveries in 2014 would also be increased to 24 aircraft from 18 aircraft while in 2015, the airline would take delivery of two aircraft as opposed to nil, it said.

No penalties are payable by AirAsia in revising the delivery schedule of the 2011 aircraft, it added.

AirAsia said the deferral of the 2011 aircraft was due to forecast infrastructural constraints with the current airport facilities.

It said that until the new low-cost carrier terminal was constructed, the present infrastructure at the low-cost terminal would not be able to accommodate AirAsia's fleet expansion in the number of aircraft originally scheduled to be delivered in 2010 and 2011.

The scaling down of the aircraft delivery in 2011 is to further enable AirAsia to optimise its fleet and avoid the costs associated with leaving idle or underutilised aircraft, thus avoiding incurring depreciation, interest expense and other costs without earning revenue.

'People' And 'Positive' Behind Airasia's Success, Says Founder

29 October 2009

BEIJING -- The two "P"s -- "People" and "Positive" -- coupled with other factors have contributed to the success of Datuk Seri Tony Fernandes and AirAsia, the low-cost airline founded by him.

"We have great people, very good discipline, been very positive and we operate at lowest cost," said Fernandes in an interview with Bernama in Beijing Wednesday.

AirAsia and AirAsia X were jointly awarded "Best Airline of the Year 2009" and Fernandes received the CAPA (Centre for Asia Pacific Aviation) Legend Award at the CAPA Aviation Awards for Excellence presentation ceremony in Beijing Wednesday night.

The CAPA Legend Award (Aviation Hall of Fame) is given to outstanding individuals who bring about a revolutionary change in the aviation industry.

"I think there is always business for us if we are positive. If you are negative, always worry about problems, always complain, then you lost 50 per cent," said Fernandes, who is also AirAsia's group chief executive officer.

"If you encounter problems, don't put your head in the sand. Even if you have to cry, cry for half a day and then bounce back," he said.

At the award presentation, Fernandes was praised for "his drive, creativity, enthusiasm in driving liberalisation of the aviation industry across the region".

AirAsia managed to show growth in the first half of 2009 with even greater growth in the second quarter despite the global financial crisis and the pandemic H1N1 flu which affected many airlines across the world.

The AirAsia group achieved an operating profit of RM288 million in first half 2009, which was five times more than same period of 2008. It also achieved a passenger growth of 24 per cent year-on-year.

"Being an airline that make the most impact for the year, we are one of those which achieved the highest profit performance, and being innovative in developing new routes, I think these contributed to our winning," Fernandes said.

AirAsia set up AirAsia X, a new business model which put low-cost long-haul travel to work.

"No one else had done it before, and a Malaysian company did it," Fernandes said.

"It is a great honour for a Malaysian company to come to Beijing and beat China Airlines, Cathay Pacific Airlines, Singapore Airlines and others. We should be very proud," he said.

"It shows you that Malaysia can be the best," he added.

On AirAsia's performance in the China market, Fernandes said: "The China market is fantastic and I think we just scrapped the surface. There is a lot more development that can be done. We are looking at routes from Kota Kinabalu and Penang to China cities."

"We are now running 193 flights a week in China, we are bringing a lot of tourists to the Malaysian market," he said.

Within just three years, AirAsia has started its Hong Kong, Macao, Shenzhen, Guangzhou, Haikou, Guilin and Hangzhou routes while AirAsia X launched its long-haul route from Kuala Lumpur-Tianjin route in February, followed by the Kuala Lumpur-Chengdu route in October.

"We are looking at opening up new routes to four or five more cities, like Wuhan, Ningbo, Xian, Chongqing and probaly another eight to nine routes in next two to three years," Fernandes said.

Asked if Airasia encountered difficulties in operating new routes in China, he said: "No issue at all, the Chinese government has been very supportive, they see it as a win-win situation. As AirAsia brings in more tourists, the local governments always ask us to fly in."

"AirAsia X has been a good surprise too. We carried six million people in China, that is a huge number," he added.

Fernandes said AirAsia X was looking at a few new routes in China, but in next few years the airline would probably focus more in India before coming back to China.

Asked on the possibility of AirAsia collaborating with China's airlines such as its low-cost carrier Spring Air, he said that AirAsia was currently focusing on the Asean market.

"But we can always collaborate with local airlines. We bring a lot of people to the major hubs like Tianjin and Chengdu and we can cooperate with local carriers in the sharing of passengers," he added.

On whether AirAsia considered it a challenge if China's low-cost carriers were to expand overseas, Fernandes said: "The market is huge and I think we mustn't worried about competition, there is big enough market for all of us. I take a very different approach from many other airlines which want to keep the market closed."

Asked if Airasia was considering buying China's home-made aircraft like the C919 from China Commercial Aircraft Corporation in future, Fernandes said the airline had already placed a big order for Airbus aircraft.

"I don't see it happening anytime soon, but for next five to 10 years, some of our aircraft may come from the factory in Tianjin."

AirAsia X set to increase capacity to Australia

29 October 2009

AirAsia X Wednesday announced that it would be increasing capacity to both Melbourne and the Gold Coast from February next year in response to higher levels of consumer demand.

Between Kuala Lumpur and the Gold Coast AirAsia will increase its frequency from six weekly services to seven from the 6th of February, 2010, while Kuala Lumpur to Melbourne will lift from eleven weekly flights a week to twelve from the 3rd of February, 2010.

In addition, the new services will also see the inclusion of the new premium economy product from AirAsia X.

"This is a great achievement for AirAsia," said Darren Wright, AirAsia X General Manager Australia. "We're very proud of the fact that the Gold Coast was our first flight destination and we've seen an increase in passenger traffic on this route every quarter."

"The Kuala-Lumpur - Melbourne route has been particularly popular for us and it shows no signs of weakening any time soon."

AirAsia X is the long-haul arm of budget carrier AirAsia, and operates with a fleet of four A330-300s and two A340-300s.

AirAsia/AirAsia X scoop top award at Centre for Asia Pacific Aviation's annual Awards for Excellence

28 October 2009

(Beijing, 28 October 2009) AirAsia and AirAsia X were named the joint winners of the prestigious Centre for Asia Pacific Aviation (CAPA) Airline of the Year Award for 2009 at a gala reception in Beijing this evening. The Awards Ceremony was held as part of this year’s sixth annual Asia Aviation Outlook summit, showcasing airline and airport CEOs from around the Asia Pacific and Middle East regions.

The CAPA Airline of the Year is awarded to the airline that has had the greatest impact on the development of the airline industry in the region, establishing itself as a leader, and the benchmark for others to follow.

“AirAsia has had another superlative year amid some of the toughest conditions to hit the airline industry on record. An innovator in revenue generation, with a strongly developing network and consistent focus on maintaining its world leading low cost base, AirAsia was the outstanding performer in 2009. AirAsia and AirAsia X are leading the way in developing short-haul to long-haul connectivity in ways which promise to revolutionise the international marketplace”, said Peter Harbison, Executive Chairman of the Centre for Asia Pacific Aviation.

Other winners of this year's CAPA Awards included:

Beijing Capital International Airport, named the CAPA International Airport of the Year

“Beijing Airport has had an outstanding 18 months, handling the demands of the Olympic and Paralympic Games and performing with distinction amid a difficult market environment", said Mr Harbison.

Air Arabia was named CAPA Low Cost Airline of the Year

“Air Arabia has again demonstrated its contribution to the development and expansion of regional air markets, with continued growth at its primary Sharjah hub and exciting new cross-border ventures in Morocco and now Egypt. Air Arabia has maintained a disciplined business model over the past 12 months and, headed by a strong management team, is one of the world’s best positioned LCCs to benefit from the growth in economic development and liberalisation of aviation markets”, said Mr Harbison.

Minister Li Jiaxiang, Minister of the General Administration of Civil Aviation of China was recognised as the CAPA Aviation Minister of the Year

Mr Harbison stated, "Minister Li has provided strong leadership of and support to the Chinese aviation sector that is both confronted by tremendous opportunities, as well as significant challenges. Minister Li oversaw a highly successful air transport operation during the Olympic Games and has continued the task of developing China’s aviation infrastructure and policy settings as it takes a leadership role in global aviation this century”.

Mr Kong Dong, Chairman of Air China, accepted the CAPA Aviation Executive of the Year

“Our Executive of the Year has been a tireless advocate for the reform and streamlining of the structure of the Chinese aviation industry and has effectively guided Air China through a difficult period for the sector. The airline is well positioned to benefit from the upswing in Mainland and SAR aviation markets and the vast opportunities presented in North Asia and beyond in the coming years", said Mr Harbison.

Dato’ Sri Tony Fernandes, CEO of AirAsia Group Bhd joined the CAPA Hall of Fame, when he accepted the CAPA Legend’s Award

He joins Ray Webster (fmr Chief Executive Officer of easyJet), Dr Cheong Choong Kong (fmr Deputy Chairman and Chief Executive Officer of Singapore Airlines) and Maurice Flanagan (Vice Chairman, Emirates Airline) and Dato' Seri Bashir Ahmad, Managing Director of Malaysia Airports Holdings Bhd in the CAPA Hall of Fame.

"This award honours strategic leadership, vision, innovation and influence in the aviation industry. Tony Fernandes is the youngest inductee into the Hall of Fame, but his impact on Asia Pacific aviation has been profound. Pioneering the cross-border joint venture model in Asia to open up new opportunities beyond its Malaysian base in Thailand and Indonesia, as well as low-cost long-haul services to link the region globally, the AirAsia Group is on track to handle 24 million passengers in 2009 – some 30% more than in 2008, despite the global economic slowdown. But AirAsia’s impact is much more than its generation of strong traffic growth. The airline is catalysing positive change in the way governments, suppliers and its rivals are thinking and acting. We are delighted to recognise Tony Fernandes’ leadership role in driving our industry forward”, said Peter Harbison.

Abu Dhabi Airports Company received the Award for the New Airport Development of the Year

Mr Harbison noted, “Abu Dhabi’s excellent new terminal facilities, which came on line in March this year, provided the breathing space the airport needs ahead of its exciting multi-billion dollar midfield terminal development that will deliver further capacity next decade to spearhead Abu Dhabi’s development as a global aviation centre. Abu Dhabi Airports Company is to be commended for its active pursuit of airline partnerships, which has helped propel the airport forward”.

Incheon International Airport received the new Award for CAPA Airport City of the Year

“Incheon International Airport is leading the way in the region as a multi-service airport hub, offering an array of logistics, transportation, leisure, accommodation and attractions infrastructure that is unparalleled in the region. The developments have raised South Korea’s regional competitiveness and positioned it well to benefit from the coming recovery in the aviation business”, said Mr Harbison.

Melbourne International Airport was named the CAPA Low Cost Airport of the Year

“Melbourne International Airport has been one of the world’s best performing airports amid the global economic downturn, regularly attracting new domestic and international services. Management’s focus on delivering outstanding facilities and services at affordable rates for the airline sector is driving results, as Melbourne continues to win new business from full service and low cost carriers, which is growing the aviation, trade and tourism opportunities for the local area and the wider State of Victoria”, said Mr Harbison.

Tianjin Airlines accepted the CAPA Regional Airline of the Year

Mr Harbison stated, “Tianjin Airlines is a relatively new face in the regional Chinese aviation market, but it is having strong early success as it continues to roll out an aggressive fleet and network expansion agenda. We look forward to witnessing the airline’s continued growth in what remains a very high potential segment of the overall Chinese aviation opportunity”.

Civil Aviation Authority of Singapore accepted the new award recognising the CAPA ANSP Provider of the Year

This CAPA Award is a new one in 2009, in recognition of the increasingly vital role that ANSPs and their governments can play in helping improve air traffic systems, thereby supporting airline efficiencies and particularly in order to reduce greenhouse gas emissions. The CAPA ANSP of the Year is awarded to the air navigation services provider that has shown leadership in addressing the operational and costs needs of the industry and to promoting environmentally-friendly procedures, so as to offer a benchmark.

“CAAS, in coordination with the airlines and with ICAO, has allocated financial and human resources in ways that have substantially improved Singapore’s ATM and runway procedures, helping reduce flight times and improve traffic flow. From an already high base, this has produced a model for others to imitate. CAAS’ leadership also extends to this year’s move to restructure CAAS and corporatise the operations of Changi Airport, improving functionality and accountability”, said Peter Harbison.

Cathay Pacific accepted the new award recognising the CAPA Airline Environmental Performance of the Year

Mr Harbison stated, “Cathay Pacific has shown outstanding environment leadership and concern, spanning practical applications to reduce the company’s carbon footprint, to championing big picture policy issues that will impact the sector for decades to come. The industry thanks leaders like Cathay Pacific to drive a thoughtful agenda to minimise aviation’s impact on the environment.

GMR Hyderabad International Airport accepted the new award recognising the CAPA Airport Environmental Performance of the Year

GMR Hyderabad International Airport (GHIAL), which opened in March 2008, represents a new era in India’s airport infrastructure development. Mr Harbison stated, “GHIAL is to be commended for incorporating sustainability in the airport development, as a result of which it is the first airport in Asia to achieve a LEED Silver certification for Leadership in Energy and Environmental Design from the US Green Building Council. This sets a benchmark for other airports in the region to follow”.

About the judging process: Asia Pacific airports, airlines and the industry are reviewed constantly through the year via the Centre's extensive data and information services gathering and reporting. This daily performance analysis, along with feedback from our Members, is accumulated into a series of recommendations. A highly experienced aviation advisory panel – including industry CEOs - reviews and decides on our recommendations.