AirAsia to cut costs by 7 per cent: Tony Fernandes, CEO

CHENNAI: Malaysia-based low cost air carrier AirAsia today indicated cutting
costs in 2014 up to seven per cent, a top official said today.

"2014 is about cutting cost. We think we will cut costs by seven per cent," Air Asia Bhd Group CEO Tony Fernandes wrote on micro-blogging site 'Twitter'.

"Ancillary income will rise and margins will rise," he said.
Fernandes, who is in Frankfurt for a roadshow, said, the load factor for the airline was 91 per cent in December.

"(Air) fares can go lower than they are now. Load factor for December was a whopping 91 per cent", he said.

He said the strategy for 2014 was by "lower costs. higher ancillary through services and the Emirates project".

"I love competition. Will provide some huge competition to full service airlines. Watch us in 2014. Cutting loads of cost," he said.
Source : http://businesstoday.intoday.in

Good year ahead for aviation?

THE rapidly-expanding aviation sector is expected to remain challenging and competitive in 2014. Nevertheless, industry players and analysts are of the opinion that the outlook will be “positive” next year.

According to industry players, the opening of KLIA2, which has been delayed numerous times, promises an interesting development as it is expected to boost air traffic. At the same time, all eyes will also be on Malaysia Airlines (MAS) turnaround story.

AirAsia group chief executive officer Tan Sri Tony Fernandes says 2014 would be a big year for the AirAsia group and it would be introducing new duty-free business like a mall in the sky to boost its ancillary income.

He adds that the outlook seems positive for the industry while competition would be more rational next year.

He says there was rising demand for air travel as well as positive economic growth.

“I think if competition is rational, which I believe it will be, the industry’s outlook will be positive. I think 2014 has huge benefits for Malaysia because of AirAsia X’s growth,” he says.

Fernandes says the opening of KLIA2 will give the industry a massive boost.

“As long as we keep fares low, people will fly. There are 3 billion people in Asia,” he adds.

To reflect the optimism of the aviation industry, the International Air Transport Association (IATA) recently revised its industry outlook upwards for the coming year. It is now predicting that airlines will collectively post a global net profit of US$12.9bil in 2013, surging to US$19.7bil in 2014.

IATA’s projected profit of US$19.7bil for 2014 is a new record for airlines. The upward revision is due to lower jet fuel prices over the forecast period as well as improvements to the industry’s structure and efficiency already visible in quarterly results this year. Passenger markets continue to outperform the cargo business which remains stagnant both on volumes and revenues.

Industry net profit margins, however, remain weak at 1.1% of revenues in 2012, 1.8% in 2013 and 2.6% in 2014. Within this aggregate forecast for the entire industry, performance of individual airlines and regions will vary considerably.

Asia-Pacific airlines are expected to post a US$4.1bil profit in 2014, up from US$3.2bil in 2013.

“Overall, the industry’s fortunes are moving in the right direction. Jet fuel prices remain high, but below their 2012 peak. Passenger demand is expanding in the 5%-6% range – in line with historical trend. Efficiencies gained through mergers and joint ventures are delivering value to both passengers and shareholders. And product innovations are growing ancillary revenues,” according to IATA director-general and CEO Tony Tyler.

MAS group CEO Ahmad Jauhari Yahya says “2013 was an exciting year for us at MAS. New routes to Dubai, Kochi and Darwin were introduced as we look to improve our network reach. We also deployed our flagship A380 aircraft to the Paris and Hong Kong routes. We expect 2014 to also be a year of more exciting projects.’’

He adds that “we are constantly monitoring markets and various destinations around the world and exploring their economic viability’’.

Malindo Air CEO Chandran Rama Muthy says the airline’s performance the past 10 months has been good and he expects the trend to continue to 2014. Malindo Air will continue pursuing significant domestic and international expansion to capture a greater share of the regional market.’’

He adds that the airline has 11 aircraft this year and will increase to 25 next year.

‘‘We will continue pursuing international expansion, sticking to our long-term plans of turning the under-used KLIA into our main transit hub, thus easing the congested Singapore and Bangkok airports. With the launch of our Indian market in the beginning of the year, we are poised to capture a bigger market share. However, we will focus on a good foothold in the South-East Asian market. Domestically, we are now providing more than 60,000 weekly seats, and with more aircraft next year, we are projecting an increase of 60,000 seats,’’ Chandran adds.

Meanwhile, analysts expect competition in the industry to continue to be intense and not restricted to local airlines.

They note that full-service airlines and low cost carriers are expanding their fleet and seat capacity, making South-East Asia one of the fastest growing aviation markets in the world. Carriers across the region are aggressively expanding their network and capacity ahead of the full implementation of the Asean Open Sky policy in 2015.

AirAsia X Bhd, which was listed on Bursa Malaysia in July, has ordered 25 more A330-300s valued at US$6bil (RM19.55bil). Another notable order of aircraft for 2013 would be Emirates’ purchase of an additional 50 Airbus A380 superjumbos valued at US$20bil, confirming the continued strong demand for air travel.

RHB Research says competition in 2014 will persist, but will be less severe asMalindo Air opts to take a more conservative expansion strategy, which bodes well for AirAsia and MAS.

“We see value in the former and AirAsia X as their valuations are relatively cheap compared to their regional and global peers,” it says.

RHB Research maintains its overweight call on the sector, citing the Visit Malaysia Year 2014 campaign and KLIA2 as the theme for higher passenger arrivals.

“The year 2014 is expected to remain competitive as Malindo continues to spread its wings. However, we think Malindo Air will be less aggressive due to its high cost structure.

Its airfare discounts have narrowed while there have been capacity cutbacks on some routes. Furthermore, fleet delivery so far (it currently has six narrow-bodied aircraft) has been below its initial target of 12 aircraft.”

RHB Research says “2013 has been a challenging year for Malaysian carriers” as they embarked on aggressive capacity expansion to boost topline and achieve economies of scale amid heightening competition driven by Malindo Air’s debut. This resulted in yields coming under pressure for MAS and AirAsia, dropping by 12.7% and 5.3% year-to-date respectively.

The entry of Lion Air group’s Malindo Air this year has proven to be impactful in the MAS-AirAsia duopoly domestic air travel market as both airlines have seen their yields affected by the new carrier.

AirAsia executive chairman Datuk Kamarudin Meranun says its yield has been slightly affected due to the intense competition and that it will be coming back with more promotions, cost reductions and new ancillary income streams to defend its turf.

RHB Research says AirAsia’s low-cost model has enabled it to stand strong despite intensifying competition amid a cost-conscious culture.

It says Malaysia Airports Holdings Bhd (MAHB) benefits the most from rising passenger demand as low air fares stimulate air travel. The airport operator reported a 17.3% jump in year-to-date passenger numbers in October, driven by strong growth in both the domestic and international segments.

There’s a new carrier, Flying Fox Airways, an Ipoh-based airline which aims to increase the accessibility of Ipoh.

Flying Fox was supposed to commence operation on Dec 13 but got grounded on the day itself as the Ipoh airport runway was not ready for their aircraft.

Flying Fox complained that it had to cancel all its Ipoh-Medan flights between Dec 13 and June next year because the airport was unable to accommodate the Boeing 737-400 and Airbus A320.

On the opening of KLIA2, there have been reports suggesting that the contractors may not meet the scheduled completion to commence operations in April 2014.

MAHB has also expressed concern over the slippage in the work schedule of the terminal building, which is being built by the UEMC-Binapuri joint venture.

Nevertheless, UEM Construction Sdn Bhd and Bina Puri Sdn Bhd, the main contractors of the new low-cost terminal, have reaffirmed their commitment to complete work on the project within the stipulated deadline of Jan 31, 2014.

Source : The Star Online, 28 Dec 2013

Tan Sri Tony Fernandes - Founder and Group CEO of AirAsia Bhd

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

Tan Sri Tony Fernandes announced Wi Fi on board AirAsia at Twitter account

Tweet from AirAsia's Tan Sri Tony Fernandes  :

"Pleased to announce to all Airasia guest. In the 1st quarter we will have a Wi Fi on board. New in flight. Social media and shopping. "

Oh, i just activate my twitter account. Zero followers! haha... A new start for 2014!!

@senangtravel

AirAsia X Cheap flights to Europe set to return

Good news for frequent flyers to Europe...


Low-cost Malaysian airline AirAsia X announced on Wednesday an order of 25 long-range A330-300 aircraft with a catalogue price of nearly $US6 billion (RM19.6 billion) as it looks to return to serving Europe.

"This order stamps our firm intent to dominate the long-haul, low-cost carrier space and marks the next phase in our development to be the undisputed global market leader," AirAsia X's director Tony Fernandes was quoted as saying in a statement.

Airbus said at a joint press conference in Paris it was the biggest single order for the widebody twin-engine aircraft from an airline, and would begin delivering the planes to the long-haul affiliate of the AirAsia group in 2015.

The order includes the latest version of the A330-300 capable of flying from Asia to Europe or the Americas non-stop.

Foto : twitter @azmanosmanrani

12 success strategies of AirAsia boss Tony Fernandes

Hi Friends,

I had permission from Mr. Wilson Lee Flores who written about "12 success strategies of AirAsia boss Tony Fernandes"  in Philippine Star (www.philstar.com) to share be shared in my blog.

From left: AirAsia boss Tony Fernandes: “In AirAsia we consider ourselves basically a dream factory … where people can pursue their passion.” Fernandes’ business partner, AirAsia Zest chairman Alfredo “Fred” Yao, Joy D. Caneba, chief operating officer of AirAsia Zest

 

We are what we repeatedly do. Excellence, then, is not an act, but a habit.  —Aristotle
I fly because it releases my mind from the tyranny of petty things. —Antoine de Saint-Exupery
MALAYSIA — Congratulations to AirAsia Group boss Tony Fernandes of Malaysia and his business partner, the Philippines’ undisputed “Juice King” Alfredo “Fred” M. Yao. On Dec. 7, I was one of the guests on the inaugural flight Z2 511 of budget airline AirAsia Zest from Manila’s Ninoy Aquino International Airport Terminal 4 to Miri City in the Sarawak state of Malaysia, which took only two hours and 20 minutes.

Manila is the second international direct flight destination for Miri City, the first being direct flights to Singapore. AirAsia Zest chief operating officer Joy Caneba said this new flight route is not only significant for tourism and trade, the four flights every week will help make traveling so much easier for numerous overseas Filipino workers in east Malaysia and Brunei.

United Daily News publisher Sim Yong Liang said Miri City is an ideal, affordable, fun, relaxing and safe tourist destination due to its lush primary forests ideal for jungle trekking, like Niah national park, with its prehistoric human remains, and the UNESCO World Heritage site Mulu Caves, Lambir Hills waterfalls and wildlife, scuba diving, delicious food, colorful and diverse cultures and different ethnic groups.

 

How Asia’s biggest budget airline was built

Who is 49-year-old Tan Sri Anthony Francis “Tony” Fernandes, who has built the publicly listed AirAsia Group into Asia’s largest low-cost airline, with over 120 destinations servicing over 220 million passengers?

AirAsia has been named the “World’s Best Low Cost Airline” in the annual World Airline Survey by Skytrax for five consecutive years from 2009 to 2013. What are his success strategies? Here is our list based on interviews and some research, not in any order:

A good grasp of finance — Similar to Megaworld’s Andrew Tan, Fernandes is an accountant by training and good at numbers. Educated at the London School of Economics, from 1987 to 1989 he worked as the financial controller of British tycoon Richard Branson’s Virgin Records in London. He is from Malaysia’s ethnic Indian minority, with ancestral roots in India’s former Portuguese colony of Goa, which explains his Portuguese-sounding surname.  Fernandes was formerly Southeast Asian regional vice president for Warner Music Group from 1992-2001. No need to become accountants, but we all need a good understanding of accounting and finance.

Determination — During a speech at the Sabah International Business Luncheon Talk 2012, Fernandes was quoted by the Borneo Post as saying nothing is impossible to achieve as long as there is determination. He turned around an unprofitable and small airline company with only two airplanes to one that now has a 160-strong fleet of aircraft in only 12 years!

Do not fear failure — “I don’t care about failing because I do not want to sit down in my older years and say, ‘How come I didn’t try?’ So we did and Malaysia is the country which allowed four Malaysians to go out and make their dreams come true,” Fernandes said.

Take care of key assets, your people — One of Fernandes’ strengths is his caring for and nurturing good employees. He sees people as the “key asset” of any business and hopes to help develop their full potential, passions and dreams. His business offices have no walls and he seeks ideas from his staff. On Dec. 12, Fernandes gave 263 Chopard watches totaling five million ringgit as gifts to 263 staff members who’ve been with the company 10 years. Chopard is a 153-year-old Swiss luxury watch brand. Also, after typhoon Yolanda destroyed Tacloban City, Fernandes reportedly sought out one of his employees whose home was wiped out and I heard the tycoon will help rebuild the house.

Branding — JG Summit Holdings founder John Gokongwei Jr. years ago told me that earning profits is not enough in business, that it is important to create a brand or brands. One believer in the power of brands is Tony Fernandes. He said it took him seven years to consciously and consistently build up the AirAsia brand name and logo as distinct and internationally known.

Marketing — Tony Fernandes invests in and excels in marketing. He said: “If you have a great product but no one knows about it, it’s history.” Fernandes reminds me of his former boss, Virgin Group’s colorful Richard Branson and America’s high-profile realty developer Donald Trump. Like Trump, Fernandes this year hosted the Asian version of the TV series The Apprentice Asia, with the winner being Filipino UP Diliman economics graduate Jonathan Allen S. Yabut, who is now also chief marketing officer of AirAsia Zest.

Support from the government — As in most societies, entrepreneurs cannot go against the government but need their support. Fernandes got his break in 2001 when then Malaysian Prime Minister Dr. Mahathir Mohamad heard of his dream to start an airline and advised him to just buy the heavily in-debt, government-linked AirAsia. Fernandes mortgaged his house and got personal savings to buy this firm with two old jets and US$11 million worth of debt. He bought the company for one ringgit (about 26 US cents). After he turned around AirAsia, in 2003 Fernandes lobbied Dr. Mahathir to raise the “Open Skies” idea with leaders of Thailand, Indonesia, and Singapore, leading to these nations giving AirAsia and other budget airlines landing rights.

Use digital technology — Fernandes believes in using digital technology for his businesses. Much of his business comes from AirAsia.com. In fact, one unique thing about AirAsia flights is its inflight magazine Travel 3Sixty, which has this reminder: “Touch me, feel me and flip me over, but you can’t take me home. Read me online.” I think Fernandes isn’t scrimping on publishing costs, it is part of his clever marketing strategy to make passengers discover and enjoy his website.

Generosity — Fernandes is legendary for his personal and corporate generosity. He gives people big gifts, not only to generate loyalty to the business, but he is also generous in philanthropy, for example, his relief assistance to typhoon Yolanda victims here in the Philippines. His AirAsia Foundation also recently supported the social enterprise Rags2Riches led by Reese Fernandez-Ruiz of the Philippines. Rags2Riches is a genuine NGO helping underprivileged Filipino artisans transform their lives and turn scrap into high-fashion bags and other items.

Passion — Passion seems to be a common denominator among achievers in business, the arts, sports and other fields. Tony Fernandes hires people with passion. He is exceptionally passionate, not only about his firms, charities and employees, but also about sports. He owns a football team in England, an F1 car racing team and is a major supporter of Asia’s biggest mixed martial arts sport, the OneFC.

Bold vision — Tony Fernandes has a bold, global and long-range vision for his various companies. As a child, he dreamt of three things: running an airline, owning an English football club and owning a Formula One racing team.

Dynamic corporate culture — Fernandes said: “In AirAsia we consider ourselves basically a dream factory. We deliberately decided that we wanted a company where people can pursue their passion and we wanted to make use of all the talent that we have in-house.  The culture that we have stems from the fact that we want openness and we want people to be creative and passionate about what they do. In order to do that, we’ve got to inspire them.”

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Thanks for your feedback! E-mail willsoonflourish@gmail.com or follow WilsonLeeFlores on Twitter, Facebook and http://willsoonflourish.blogspot.com/.


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Credit to Mr. Wilson Lee Flores & The Philippine Star
Source : http://www.philstar.com/business-life/2013/12/16/1268045/12-success-strategies-airasia-boss-tony-fernandes 

French award for AirAsia boss for contribution to aviation industry

Proud moment: Hollande (left) awarding Fernandes with the Commandeur de la Legion d'Honneur award during a ceremony at the Elysee Palace in Paris -AFP

PARIS: AirAsia group CEO Tan Sri Tony Fernandes has been conferred with an award by the French government for his contribution to the Malaysian aviation industry and economy.

Fernandes received the Com­mander of the Legion d’Honneur award from French president Francois Hollande during a ceremony held at the Elysée Palace here yesterday.
The Malaysian corporate captain said it was truly an honour to be conferred the award, adding that he was “humbled” by the recognition.

“Aviation is an important industry that not only contributes to the economy of countries, but also provides jobs, connects communities and enhances livelihoods.
“As the group CEO of AirAsia, I am proud that we have positively contributed both directly and indirectly towards many people’s lives,” he said.

The Legion d’Honneur award was started by Napoleon Bonaparte in 1802 to recognise outstanding service of individuals to France, with the Commander of the Legion d’Honneur being the highest rank of honour that the French government can award to a non-French citizen.
Fernandes was previously conferred the Officier of the Legion d’Honneur award by the French Government in 2010.

The AirAsia Group operates an all-Airbus fleet, which has contributed significantly towards French and European economies via the European-owned and Toulouse-based company.
It has firm orders of 475 Airbus A320s for AirAsia, and 25 Airbus A330-300 and 10 Airbus A350-900 for AirAsia X.

Source : The Star Online, 28 Nov 2013