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“I’m making Asia smaller”

Summary:
Tony Fernandes is one of Asia's best-known and most colorful entrepreneurs. With his budget airline, AirAsia, he has revolutionized the travel industry. We spoke with him about his childhood dreams, the business principle he considers most important and social capitalism. Mr. Fernandes, you asked us to submit the questions for this interview in advance... …I read the first two, and then I got bored. [He laughs.] You want to know the same things as everyone else. Then we'll shift gears and ask you some different questions. If I were to go to Asia once in my life, where should I go? I'll give you two

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"I'm making Asia smaller"

Tony Fernandes is one of Asia's best-known and most colorful entrepreneurs. With his budget airline, AirAsia, he has revolutionized the travel industry. We spoke with him about his childhood dreams, the business principle he considers most important and social capitalism.

Mr. Fernandes, you asked us to submit the questions for this interview in advance...

…I read the first two, and then I got bored. [He laughs.] You want to know the same things as everyone else.

Then we'll shift gears and ask you some different questions. If I were to go to Asia once in my life, where should I go?

I'll give you two recommendations for a beach vacation and one for a historical site. You should definitely go to Bali; it's one of the most beautiful places in the world. And then you should go to Palawan Island in the Philippines – a paradise on earth. My third recommendation would be Borobudur, the Buddhist temple complex on the Indonesian island of Java. It's incredible. And then I'd also recommend a city: Bangkok, the most exciting metropolis in Asia. Everyone should go there at least once.

When you were a child, what did you want to be when you grew up?

I always wanted to own an airline.

You're kidding!

No, I'm serious. Even as a small child I loved airplanes. When I was seven years old, I said to my father, "I want to have my own airline." His answer was, "I'll be happy if you manage to become a concierge at the Hilton."

Most boys want to fly airplanes, not own them. And as they grow older, they generally abandon the dream of becoming a pilot.

Luckily I continued to have that dream, even while attending a boarding school at Epsom, in southern England. I would have liked to fly home to Kuala Lumpur during school breaks, but we couldn't afford it. I told my mother, "You'll see, someday I'll make flying cheap." Unfortunately she didn't live to see that happen. She died much too young, when I was just 16 years old.

You've transformed AirAsia into the world's biggest and most successful budget airline, and it's also the first one to serve a number of Asian countries. How has that changed the continent?

Now you're asking the boring questions. [He laughs.] But seriously, and without meaning to sound arrogant, I have to say that AirAsia has changed Asia quite a lot. To put it simply, I have made Asia smaller. I've brought people closer together. We've made air travel possible for people who couldn't afford it in the past. Half of our passengers are flying for the first time in their lives.

Asia's economic boom has led to a significant expansion of the middle class and increased purchasing power. How is that affecting your business?

We never went on vacation when I was young, except for an occasional weekend at the beach. That's all changed now. Today vacations are an accepted part of Asian culture. Families are spending more time together, and budget airlines have allowed them to travel farther away from home. Academics and businesses are also benefiting from faster and cheaper air travel from one part of Asia to another.

When I was seven years old, I said to my father, "I want to have my own airline."

Do you go on vacation more often than you did years ago?

Not as often as I'd like. Sometimes I'll go to Paris or the south of France, which are places I greatly enjoy. But I plan to take more vacations after I turn 55 – provided that Credit Suisse continues to provide the necessary support. [He laughs.]* Keep that in the interview, okay?

Of course. Which Asian countries have the potential for growth, in your opinion?

The Philippines will experience enormous growth over the next few years.

Why the Philippines?

It has a great deal of untapped potential as a tourist destination. Its middle class is continuing to grow. And the country's infrastructure is improving enormously. Indonesia is a similar case.

What chances do you see for India?

India really should have the most growth of any country, but the government is putting the brakes on developing tourism. For example, new airlines have to wait for five years before introducing international flights, and they are required to have at least 20 planes on domestic routes.

I attach great importance to a flat organizational structure, since I wanted to create an atmosphere that is conducive to innovation.

What are the greatest challenges facing your business?

The challenges are in that same area – government intervention, nationalism and protectionism.

Are such measures causing more difficulties than they did just a few years ago?

Absolutely. It's quite paradoxical! Thanks to globalization, we find ourselves in what is probably the most prosperous period in human history. And now we're returning to a kind of Cold War, with nationalism showing its ugly face. This is the greatest threat facing the world today. Nationalism and racism have already caused far too many problems in the world.

What business principle is most important to you?

Meritocracy is the lifeblood of my company. I attach great importance to a flat organizational structure, since I wanted to create an atmosphere that is conducive to innovation. That's a trite buzzword, I know. But if you want your employees to be innovative, think for themselves and be willing to take risks, then you need to create the right kind of environment. It has to be an atmosphere that allows people at every level of the hierarchy to think independently, and they should not be afraid to express criticism. They need to be able to tell me, too, if they disagree!

Is this concept of meritocracy new to Asia?

That depends on the country. But I would say, generally speaking, that in many areas it's still true that who you know matters more than what you're capable of. And many companies are family-owned. That has certain advantages, but it may also mean that the best-qualified person doesn't always become the company's CEO. I should also note that in recent times, Asia has been too preoccupied with ethnic and religious issues. I sometimes have the feeling that we are more segregated than ever. But to return to your question: I would say that the concept of meritocracy is fairly new to Asia, but it is quickly gaining ground.

It is also striking that a large percentage of AirAsia's top executives are women. Are you taking active steps to promote the hiring of women?

I made it clear from the beginning that I wanted to bring women into the company. I'm a strong supporter of gender equality. Before AirAsia, there were no female pilots in Malaysia or Indonesia, and only very few in other Asian countries. I've never given women preferential treatment at AirAsia. Women should have the opportunity to apply for the best jobs, but they need to be the best in order to be hired. That's what meritocracy is all about. Anything else would be tokenism.

I would say that the concept of meritocracy is fairly new to Asia, but it is quickly gaining ground.

How have male pilots responded to their new female colleagues?

Some people have expressed criticism, of course. One of my chief pilots complained bitterly at first. But we talked with the pilots and were able to win them over. And the female pilots have never given us reason not to hire them. These outdated views are beginning to disappear.

How significant is the role of women in the Asian economy?

Women have traditionally played a very important role in Southeast Asia. But in Japan and Korea, for example, women have less of a presence in the business world.

Low-cost airlines in the United States and Europe have balked at offering long-distance and intercontinental flights – why have you decided to do so?

In Europe, Norwegian Air Shuttle has already successfully introduced long-distance flights. But you're right, we were pioneers. At first there was considerable skepticism about our chances of successfully flying long distances. When I introduced short low-cost flights, I was simply bringing a new model to Asia that had already proved successful in Europe. But today Norwegian and other Western airlines are looking to us for new ideas to emulate. It's wonderful that Asia is now a role model in the air travel business.

You were born in Kuala Lumpur to an Indian father and a Malaysian mother, and you spent some of your early years in England. How have you been shaped by these various identities?

I consider myself Malaysian, first and foremost. But I could live anywhere in the world. I know it sounds like what a Miss World contestant might say, but it's true: I'm a citizen of the world. I could survive anywhere, as long as I can learn the language.

What advice would you give a young Asian student or entrepreneur?

Don't listen to anyone. Don't just do what your parents expect you to do. Follow your heart. Make sure you're offering a great product that people want. Assemble a team that complements your own abilities. Find good people to help you market your product. Far too many good ideas fail because they aren't marketed appropriately. And most importantly: Cash is king. Liquidity is the most important requirement for a business operation.

I'm left wing when it comes to social issues. I think it's possible to be a social capitalist.

What occupation did your parents expect you to choose?

They wanted me to be a doctor, like my father.

Is he happy that you didn't follow his advice, and that you've gone farther than becoming a hotel concierge?

He once told me that I had made the right decision.

You've achieved everything you wanted: You own an airline and a soccer club – Queens Park Rangers in England – and you even had your own Formula One team for a while. What else would you like to accomplish?

I'm left wing when it comes to social issues. I think it's possible to be a social capitalist. People need access to better and more affordable healthcare. So my goal is to build high-quality hospitals that are slightly more expensive than the inefficient public hospitals, but 80 percent cheaper than private clinics. I plan to present a model of such low-cost hospitals in the near future.

*The business relationship between AirAsia and Credit Suisse began in 2002 with a private placement of 30 million US dollars. Since then, Credit Suisse has been involved in all of the airline's business transactions, including its IPO of 227 million US dollars in 2004.

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