Tony Fernandes took over the airline 5 years ago when it was one step from bankruptcy.
Today, it is a booming success. It will fly 18 million passengers this year and is the region's largest discount carrier.
IN THE BEGINNING
Tony Fernandes graduated from the London School of Economics. His first job, from 1987 to 1989, was an accountant for Sir Richard Branson's Virgin Records.
Being an amateur guitarist, he felt right at home in the music business.
But he got homesick and in 1992, at age 28, he moved back to Kuala Lumpur to take a job as the youngest vice-president of Southeast Asia's Warner Music Group.
He worked there until he had his fill of corporate life. In 2001, he quit his executive job and started Air Asia with his music buddies.
In his speech, Tony recalled that it all started with a statistic he spotted in the New Straits Times. It said only
6 per cent of Malaysians had ever traveled on an airplane. That number got Tony thinking.
He recalled: 'I know my countrymen well. First, if you put the price low enough, they'd risk their lives. Second, everyone would like to travel. But it cost most people more than one month's salary to travel between Malaysian cities.'
As he saw it, it all added up to a sure-win discount airline venture.
Tony said, 'I think when you start a business, the most important thing is does the market want it? I knew the market wanted it. If that is there, everything else is surmountable because people power is strong.'
He and his music friends discussed Tony's 6 per cent statistic over dinner and decided to go for it. They would enter the airline business.
After congratulating one another on their wisdom and courage, someone asked, 'Ahh, does anyone know if we need a license to start an airline?'
Of course you do.
This dampened spirits until they hit on the obvious solution: Tony should go see Prime Minister Mahathir to ask the government to grant them a license.
With no contacts, he naively called the PM's office, explained his request and asked for an appointment. Surprisingly, he got it.
Tony recalled the appointment was for 10 AM. He was so excited that he arrived at 7 AM. His presentation lasted from 10:00 to 10:30. The PM listened politely but remained silent.
When Tony had finished, there was a long silence.
Then PM Mahathir said, 'I can see that your group has zero experience in the airline industry.
'Well, maybe that is what's needed. A fresh approach. The so-called experts haven't done a particularly good job.'
The PM explained that no new licenses would be issued.
But Tony's group of musicians could buy one of two struggling airlines. Tony recalled, 'One airline was beyond hope while the other was about dead. We chose the one that was about dead. It had two Boeing jets and $11 million in debt'.
His group purchased the company for a token price of 50 cents.
Three years later, Air Asia went public.
Now, after 6 years, the company flies 65 planes to over 100 destinations.
Tony Fernandes' stake in Air Asia is worth more than $300 million, ranking him number 15 among the richest businessmen in Malaysia.
From February 1 next year, four discount airline flights will be permitted daily between Kuala Lumpur and Singapore. It will break the 25-year duopoly of Malaysian Airlines (MAS) and Singapore Airlines (SQ), which now make 30 flights each day.
Competing for the two Singapore slots are local airlines, Jetstar and Tiger Airways. On the Malaysian side, the contenders are Air Asia and Firefly. Firefly is the new low-cost start-up of Malaysian Airlines.
CHEAP FARES ARE COMING
One year from now, on December 1, 2008, all restrictions will be lifted on the number of discounted flights that can be offered. It is part of the open-skies initiative to free up air links between capital cities of the 10-member block of Asean countries.
The savings will be BIG. Fares for the 45-minute flight between Singapore and KL now costs about $400 round trip, making it one of the most lucrative routes in the world.
After Feb 1, look for Singapore-KL air fares to fall to around $100 round trip, including taxes and surcharges.
The only thing cheaper will be to go by coach. It costs about $55.
Who says you can't beat inflation?
TEN LARGEST BUDGET AIRLINES IN ASIA
AIRLINE - HOME BASE
Air Asia - Malaysia
Jetstar - Singapore
Tiger Airways - Singapore
Virgin Blue - Australia
Cebu Pacific - Philippines
Lion Air - Indonesia
Adam Air - Indonesia
Pacific Air - Vietnam
One-Two-Go - Thailand
Nok Air - Thailand
Note: Market share of budget airlines in Asia: 10%, in US: 30%, in Europe: 25%
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