INDIA is the biggest market that Tony Fernandes is hoping to anchor in next year.
He had big dreams and had hoped to land in India this year, but it simply did not happen. He had to abandon two launch dates – September and October – as AirAsia India could not obtain a permit. While he hopes to receive the schedule operator permit or SOP in January to begin flying out of Chennai, Bernama has reported that he may now need to wait until mid-2014 before it can start flying.
Given his expertise in managing low-cost airlines, Fernandes remains confident of taking India by storm, but also knows all too well that India is not an easy market. There are too many players and it is a very competitive market, although it is booming due to its growing upper-middle-class segment.
Besides India in 2014, Fernandes – who has returned from his sojourn in Jakarta – has to come up with a strategy for AirAsia to take on the competition on home turf and increase income.
Barely two years after making Jakarta their new base, Fernandes and his confidant, Datuk Kamarudin Meranun, returned to Kuala Lumpur in November this year. Before leaving for Jakarta, they had left the running of AirAsia to Aireen Omar, but Kamarudin has since been redesignated as executive chairman of AirAsia, and Fernandes as group CEO and non-independent executive director.
The entry of Malindo Air has intensified competition on the home turf not just in the domestic routes but also some regional routes. Although both AirAsia and Malaysia Airlines have discounted the new player, they are, in reality, feeling the heat from the airline, and their return suggests that they are indeed worried about competition on the home turf.
One of Fernandes’ biggest challenges in 2014 is to manage competition and price fares right, although to him, “so long as we keep fares low, people will fly”.
Getting into India will give him a link to a vast market, but it will not give him immediate returns. Hence, AirAsia Malaysia remains the cash cow. However, he has to relook at costs once again.
Fernandes is also a lot richer after the back-to-back listings of his private companies, namely, long-haul carrier AirAsia X and Tune Ins Holdings Bhd this year, which raised more than RM1.2bil.
In 2014, Fernandes is looking at listing Indo AirAsia, and aside from India, he also wants to get into Myanmar, a tough market which other airlines are also eyeing. This will give him another hub that he needs, as he has dreams of AirAsia becoming like Emirates.
Also in the cards for next year are plans to introduce a mall in the sky – selling duty-free stuff to boost ancillary income.
He also has to shift operations from the low-cost carrier terminal in Sepang to KLIA2. Will he use aerobridges or make his passengers walk the tarmac at the new airport?
Most importantly, Fernandes has to deliver what the shareholders want - better dividends. – By B.K. Sidhu
Source : The Star Online, 28 Dec 2013
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