Flying High, My Story Page 11

  This was brought home to me clearly when a little while after the MAS skirmish, I was asked by the Prime Minister to present to the National Economic Council. I hadn’t seen him since that meeting when he’d granted us a licence but not fully opened the door. I walked into the room and everyone was miserable as hell – I think they were doing it to intimidate me. I just about got through the presentation.

  After a long pause, Mahathir said, ‘You should be congratulated, it’s amazing what you’ve done.’

  The whole mood of the room changed from intimidation to warm embrace.

  The fallout from the presentation also boosted our cause. The PM removed the subsidy that MAS were paid on domestic routes. It was a huge moment because from that point on MAS had to compete with us on level ground – something they just weren’t geared up to do. The situation was starting to become a little bit more like Goliath versus Goliath rather than David versus Goliath. Once again, I felt we were making real progress. The airline was growing fast, we had our first joint venture airline with AirAsia Thailand, had acquired a 49 per cent stake in the failing Awair Airline in Indonesia, and we had won a partial victory against the state-run MAS’s monopoly on domestic routes. Our fleet was expanding and, thanks to our total focus on cost and aggressive marketing, we had cleared our portion of the debt we had taken on in 2001.

  I was in my flat in London at Christmas 2004 when the first reports of the tsunami started to appear on the news. I watched in horror as the pictures showed whole villages swept away. An AirAsia plane was almost washed off the apron in Phuket. Immediately we got on top of the situation – offering to fly rescue and relief workers to the affected areas, providing as much information and logistical support as we could. We realized that the region would need a massive amount of support so we started the ‘Love Phuket’ campaign and made it a point of principle that we didn’t cancel a flight.

  When the scenes of devastation in Banda Aceh in Indonesia were broadcast, I arranged for us to fly there. Everyone thought I was mad but I repeated, ‘We have to connect this community, we can’t have them ostracized or cut off by this tragedy.’

  I knew people had to get there to fix it as well, of course. I went to Aceh shortly after. I’ve seen a lot of things and been through some stressful and distressing situations but Banda Aceh was something else. It was flattened; not even Hollywood could have invented something as tragic. Every dwelling, house and high-rise had been ripped from its foundations, there were ships (not just boats) in the middle of the streets and the people were left with absolutely nothing except what they had on their backs. It was devastated and devastating.

  Our links with Banda Aceh, I’m proud to say, are as strong now as they were back then. My commitment to the region means that I feel responsible and want to help wherever I can – to try to make something positive out of adversity.

  AirAsia started to grow stronger. We took on more planes, our operations became slicker and our profile higher. We were making progress financially and, as far as market share was concerned, we were also, we thought, getting smarter at running the business.

  We gained so much confidence that we took on sponsorship of one of the world’s largest sports teams. In 2005, Manchester United FC approached us to sponsor their cafe. I’ll admit I was a bit surprised – why would one of the biggest football clubs in the world be interested in a small Asian airline? But I knew a partnership would make sense for AirAsia – Manchester United’s chief, David Gill, estimated that there were 40 million club fans in Asia so I definitely wanted to be involved. However, the cafe idea seemed a bit under-powered, so I said to David: ‘No, I want to sponsor the club.’

  David replied, ‘Let’s talk.’

  I flew to London and met a guy called Andy Anson who had just been appointed Man United’s commercial director. We signed an initial one-year deal which meant that we got our logo on the electronic pitch-side billboards.

  It’s difficult to express what a huge deal this was. We still only had a tiny fleet at the time, and going to Old Trafford, Din and I were like village boys – we didn’t watch the match at all, we just looked out for when our logo would appear on the billboards.

  The benefits worked both ways. Sir Alex Ferguson told me that the AirAsia sponsorship photo was the only one that the entire squad turned up for: football players like beautiful women and we had those by the plane-load. (We have beautiful men too, but the players tend to be less interested in them.) We painted the Man United crest on some tailfins and had portraits of players on the fuselage. One – with Rio Ferdinand, Alex Ferguson and Ji-sung Park – I remember particularly because Park later ended up at QPR for a season.

  We handled the activation of the deal – the crucial part of any sponsorship – seamlessly, putting together a rolling programme of events that squeezed the most out of the association. Over and above the plane-painting, we ran competitions for Asian children to win a trial, flew a plane full of competition winners to Manchester to watch a game, sold Man United merchandise on the planes, and the players even came out to Kuala Lumpur. We set the trend for other Asian airlines who followed. Once again, being first made a difference: the team have such a huge following in Asia that our brand benefited immeasurably from the association. And Din and I got to meet and hang out with legends like Bobby Charlton, Sir Alex Ferguson and Wayne Rooney. The deal ran for three years, giving me a first taste of the football world.

  Then in 2007–8 the financial crisis hit Wall Street and the global markets, and we were badly exposed by some hedged investments we’d made – at the banks’ behest – on the oil price. Prior to the crash, the price was going up and up and up and killing all the airlines, so we took hedged positions to try to control our exposure. When the global crisis hit, the price plummeted, and it wiped out all our cash – MYR 1 billion. We were down to MYR 5–10 million, which wasn’t far off where we started in 2001. A renewed intense focus on cost, aggressive marketing and the discipline to get back to our frugal early-days behaviour meant that within two years we were back to having 1 billion cash.

  Since then I avoid the derivatives game – it is are a nightmare. My outlook has become highly risk averse. If I hedge, it is only for a year and I fix all interest rates and exchange rates where I can. Some companies take on derivatives trading, but to my mind, you might as well take the company cash to the casino. If you know which way the price of oil is going, you don’t need to hedge, simple as that; if you don’t know, you’re as likely to come out on top as if you were to throw dice. Avoid gambling the company cash at all costs. For AirAsia it was a nearly fatal mistake.

  We fought hard on every front. Persistence is one of my greatest strengths and probably one of my most annoying characteristics as far as my competitors are concerned. Getting routes out of MAS’s hands has never been easy and it took seven years to be able to fly direct to Singapore. In the early days, I was blocked continually by the government so we decided we’d fly to Johor in southern Malaysia – which is about a forty-minute bus ride from Singapore – and take our passengers over the border. We launched the route and on the first day, when the disembarked passengers reached the Singapore border, the bus was impounded and the passengers dumped on the tarmac. We couldn’t get them in – that was the level of opposition we faced from the Singapore government.

  So it was a happy moment in 2008 when the first AirAsia flight landed at Changi Singapore Airport. If you believe in something, you have to go all-in and see it through.

  Unpredictability is part of the reason I love business and is a common theme in the AirAsia story. In spite of the many unforeseen problems, by 2012 we were a real force in Asian aviation: we had grown to a fleet of 118 planes and had carried nearly 20 million passengers. The pace of growth left a lot of competitors in our wake and the ‘big boys’ were starting to worry.

  Nazir Razak (or Jay as I call him), the chairman of CIMB bank, came to see me in 2012 suggesting a deal that, if he’d proposed it ten years earlier, I’d
have thought he was taking the piss but really, really badly. The CEO of MAS, Idris Jala, had been to see him and suggested that the three of us explore the possibility of a merger. My reaction is unprintable but let’s just say I was at once excited and feeling pleased for us – we had come so far that the national carrier wanted to join forces. This was a major victory.

  Of course, on paper it made absolute sense. MAS was struggling and they had been for a number of years. They had been owned by a private individual in the nineties who had made a mess of it to the point that the government had to step in and buy it back. Funnily enough, the individual had no airline experience either – but in this case he couldn’t make it work. Even when we were setting up AirAsia, MAS had been knocking on the Prime Minister’s door for a refinancing package to secure the airline’s future.

  Idris then relinquished the reins of MAS to become a cabinet minister. The government in principle still liked the idea of a merger but there was some nervousness I think about me running both companies. Instead of a merger, the idea changed to become a share swap – in effect, we’d get a piece of MAS and the government would have an interest in AirAsia. The main thrust of the deal was to increase efficiency in the domestic market. But the government were also at that time setting up the Malaysia Competition Commission (MyCC) to ensure there was free and fair competition in commercial markets in order to protect the consumer. The thought that MAS and AirAsia could be collaborating was contrary to the spirit and potentially to the practice of this new commission. So we faced a big problem there.

  We also faced a classic problem: the outright hostility between the two airlines. I’m very open to working together to make things better for the consumer – AirAsia is built on the principle of providing a service for everyone, after all. However, our advertising and publicity battles with MAS had been brutal and our staffs would have had to swallow a lot of pride to start to work together, even if it was for the wider benefit of passengers.

  If, as was being proposed, I was to run both companies, the atmosphere at board level would have been sour, and every collaborative initiative would have been treated with suspicion by MAS employees. We got to the stage where Din and I sat on the board of MAS and MAS had representatives at AirAsia board meetings. It was tricky – if MAS raised their fares, it was my fault; if AirAsia cut a route, it was my fault. I couldn’t win and would always be seen as the wolf in the sheep pen as far as MAS were concerned.

  So the political pressure groups and unions went to work to try to undo the arrangement. Jay told me that the Prime Minister in the end said that the deal was economically sound but a political minefield.

  Finally the government decided to unwind the deal. It was a shame because there were already economies of scale, and the benefits of sharing resources were starting to emerge, but it couldn’t be sustained. For us it was an opportunity that didn’t quite work out, but for MAS it was more than that. After the whole deal fell apart, they had to go through a massive restructuring which led to thousands of job losses.

  It was frustrating but, as far as AirAsia was concerned, still a milestone: the national full-service carrier would have merged with us if the political climate had been right. That in itself was highly significant.

  They say that the strongest metals are forged in the hottest fires and for AirAsia those crises in our infant years generated a lot of heat. Each time we got hit by a disaster we emerged stronger. We did that by aggressively facing up to the challenge rather than backing down. As long as safety is not compromised, I feel that crisis brings opportunity. Would I have started the airline if I’d known what we’d be hit with in the first six years? I’d like to think I would. We worked incredibly hard, and there were some low moments, but at the end of it we felt in pretty good shape. From an airline with just two aircraft, a handful of routes, a monthly deficit of MYR 4 million and no future, in just twelve years we had built an award-winning, low-cost airline that operated 158 planes on 182 routes, carrying 42.6 million passengers and generating MYR 5.11 billion. We had joint venture partners in Thailand, Indonesia and the Philippines, and had started a long-haul operation, AirAsia X. And we felt we had a reputation as a reliable, great value, low-cost airline.

  At the end of 2013, I was asked by a journalist what I had left to fear, given all that we’d been through. I replied that I feared the unknown. The unknown was about to appear.

  7. Tragedy Strikes

  Soundtrack: ‘Tears Falling Down on Me’ by Carole King

  The phone rang at 8.25 a.m. on 28 December 2014. I was standing in the bathroom of my home in Kuala Lumpur preparing for a day out with my children, Steph and Stephen. We’d had a lovely Christmas and I’d promised a shopping trip to round off the holidays.

  I picked the phone up.

  ‘Tony, it’s Bo.’

  My heart started to race. Bo Lingam only ever calls if something is seriously wrong.

  ‘An AirAsia Indonesia Airbus has disappeared from the radar …’

  ‘What? When? Where was it flying to?’

  ‘Tony, all I’ve got so far is that it was flying to Singapore from Surabaya, it took off at 5.35 a.m. and the last contact was 6.18 a.m. I just got the call from Adrian.’

  Adrian Jenkins, as I mentioned before, is my group director of Flight Operations and one of our most experienced pilots. He had called Bo to alert him to the potential problem. They were both on their way to our offices at the airport.

  My reaction was physical: my mouth went dry, my stomach flipped and I reached out to the wall to support myself. I knew this wasn’t a training exercise – something in my gut, my blood, somewhere, knew this was a real emergency.

  We quickly agreed that I should join them at KLIA. I got in the car and called Din, who was, at it happened, in Singapore. He went straight to the airport to liaise with the authorities and to see what he could do. If our worst fears were realized there would be a lot of families arriving at the airport soon and he would have to help coordinate our response.

  As I drove, the sense of dread built. It had been a tragic year for aviation in the region. In March, MH370 – an MAS flight en route from Kuala Lumpur to Beijing – had gone down without a trace; 239 souls had perished. Then in July an MAS flight had been downed over eastern Ukraine while flying from Amsterdam to Kuala Lumpur. The death toll was 298. We at AirAsia had felt those losses as keenly as everyone else in the region and had offered whatever help we could to MAS at the time.

  There had been false alarms for AirAsia before – once I was going into a meeting with the Prime Minister when Bo called me and said that we’d lost contact with a plane in Indonesia. I had those same physical symptoms but had to carry on with the meeting. About halfway through, the PM asked me whether I was OK and I could only mumble, ‘Yes, fine,’ just wanting the meeting to end – despite the fact that we’d been waiting months for it. When I could finally escape, I called Bo back and it was a false alarm – a training routine that the CAA (Civil Aviation Authority) instigated randomly. I was so angry I wanted to start chucking things out of the window.

  Another time I was in London and someone sent out a press release saying that we’d lost a plane. They hadn’t warned me that it was a training exercise. My heart had stopped. Again.

  I arrived at the same time as Adrian and we went in together. Some people were already there and more were arriving by the second, everyone with a look of disbelief on their faces. We met in the crisis room – it wasn’t a room I’d been in before. In fact, I’d not been through any of the crisis training that some of the others had.

  When I walked in, it was pretty clear that the aircraft was gone.

  There was a lot of debate about whether I should go out to Indonesia or stay put and let the Indonesians handle it. It wasn’t really a debate in my mind. I didn’t care what the lawyers or the Indonesian government or whoever else said, I had to go out there. The reasons were simple: I had to be there because my staff had been killed and I had to be there for the fam
ilies of the passengers. I wasn’t prepared to hide behind a shield of lawyers. So I flew out to Surabaya. All the way through the flight I was tweeting updates or information, and messages of support and sympathy. Many of the messages were for the staff because I knew they would be hurting badly.

  I didn’t realize that a lot of the tweets were being broadcast by BBC and CNN and going global. To me, they were personal messages for people I knew in some cases, the cabin crew, and for everyone affected by what had happened – the families of the passengers – and all of the AirAsia family. In other words, there was no PR agency or strategy, and there was certainly no attempt to make a distinction between an Indonesian flight and a Malaysian one as some lawyers had suggested I make. This was an AirAsia tragedy and it affected us all.

  That flight to Surabaya was the longest of my life. I sat in the cabin and turned over and over in my mind what I could possibly say. Of course, we didn’t yet know what had happened and so speculation of any kind was futile. In the end I didn’t have to prepare anything, I just spoke from the heart. I tried to share my grief, tried to send as much support as I could to the families and to my staff who were all suffering as much as I was. And I was publicly grateful to airlines, the government, the rescue agencies and anyone else who offered support either physical or emotional. Dealing with this kind of tragedy has to be from the heart – no scripted comments or rehearsed lines can be as effective.

  When I arrived in Surabaya I couldn’t believe the sheer number of cameras, reporters, TV crew, onlookers. It was overwhelming. In the background I could hear people saying, ‘Tony’s here, Tony’s here,’ as I walked into the crisis room at the airport that the authorities had set up for the families.