AirAsia abandoned by partners – Tony Fernandes

AirAsia abandoned by partners, learns hard lesson: Tony Fernandes

KUALA LUMPUR: Cash-strapped AirAsia Group Bhd has voiced frustrations over not getting a lifeline from some of its close allies and partners amid intense Covid-19 pressure.

AirAsia founder and group chief executive officer Tan Sri Tony Fernandes said it had been a hard lesson to get tested with relationship at times of crises and vowed not to do business with such partners in future.

“It’s been a hard lesson for me because friends who we think are friends, suddenly abandon you. That’s the biggest lesson I have learned.

“Companies that I made tonnes of money for and in some cases (AirAsia) was the reason they exist,” he said without identifying the partners, during a virtual interview at Inmarsat’s FlightPlan: C-Suite Week recently.

Fernandes is adamant not to “come back and do business” with such partners when the situation got better.

“They drop us like a hot potato. That won’t be something I would forget. I remember banks and partners that stood by us. We will discriminate for sure,” he said, when commenting about friends and partners who had abandoned the group.

He continued: “Business is not short-term.”

While the experience is a bitter pill to swallow, the low-cost carrier (LCC) is confident of circumnavigating the turbulence.

AirAsia continues to face severe liquidity constraints as it restructures debts by undertaking various exercises to raise funds and restart operations when international borders reopen.

The Covid-19 pandemic has adversely affected the airlines’ operations, hampering demand for air travel which was exacerbated by the closure of international borders to contain the virus infections.

Fernandes said a standardised global travel policy should be implemented in every country to promote a safer air travel experience, without having a different set of entry requirements and specific vaccine rules.

“That is one thing. I think the tourism bodies should have done better but still have a lot of work to do. It is better to have a combined association as opposed to having an agonistic relationship as we need each other – rather a symbiotic relationship,” he said.

Fernandes urged airlines to reimagine their business model while re-looking at their capacity and utilising the right aircraft that match demand and capacity to facilitate air travel recovery.

“Some airlines need to reimagine their business model, relooking at their capacity (right plane utilisation).”

Fernandes is hopeful that the commercial aviation market will be a segregated airline industry, specialising in a niche market that caters to various segments.

“Those who know the segment, well should focus on it and build capacity to serve that market such as business, high-end, low-cost market,” he said.

He also expects better cooperation with airports in anticipation of the inevitability of the return of business travel.

“The world is a connected place and is getting smaller. For example, Asians want to come to America and Europe. There is also a good market for legacy airlines but they should focus on what they know best and LLC and private jet operators should focus on their best.”

Fernandes pointed out that airlines had a poor return of capital previously as they wanted to variably do everything themselves, behaving in monopolistic ways with the support of the governments.

Meanwhile, he said customers would demand a better passenger experience with digitisation at its core such as having a wifi service onboard as the passengers would want to be connected.

“Although customers’ experience has improved, I think there needs to be more innovation of seating and its comfort. Even for LLC, we constantly look at ways to make the experience better as oppose to getting more people on board,” he said.

Fernandes expects Asia’s travel demand to reach pre-pandemic levels towards the end of the second quarter (Q2) of 2022, lagging behind Europe which could recover by Q1 of next year.

“Asia will be a bit behind as we have big economies like India and China. It depends on how long it will take to fully recover and for the borders to reopen and their readiness to let their people out to certain parts of Asia,” he said, adding that governments in the region had imposed stricter measures to contain the pandemic.

Fernandes said flying had become a commodity and the people would want to get the best value.

“It is even more inevitable as people will fly more short-haul. I think the crisis will put even a big emphasis on short-haul travel,” he added. Nst

AirAsia abandoned by partners – Tony Fernandes

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