Ignore low-cost carriers at your own peril, Fernandes tells aviation agencies

AirAsia Group CEO Tony Fernandes says while he has no issue with MAHB making money, it should give low-cost airlines what they want as they make up 60% of its customer base. – EPA pic, September 15, 2019.

MALAYSIA Airports Holdings Bhd (MAHB) and the Malaysian Aviation Commission (Mavcom) cannot just bury their heads in the sand and refuse to acknowledge the rise of low-cost carriers (LCC), Tony Fernandes told The Edge.

In an exclusive with the business weekly, the AirAsia Group CEO said low-cost travel was growing rapidly at a rate of more than 50%.

“So, MAHB and Mavcom cannot have their heads in the sand and just hope things will go away. It is not going to go away because it is not only about AirAsia. It is about low-cost carries like Indigo, Cebu Pacific and SpiceJet coming,” he told the weekly.

It is clear that LCCs, such as Indigo, Cebu Pacific and Scoot, are operating at klia2 because they want low-cost facilities, he added.

This, said the aviation mogul, indicated that more LCCs would operate out of Malaysia if MAHB built more low-cost carrier terminals (LCCT).

“People don’t make the right decision because they are emotional as opposed to what is good for the country, what is good for their own company, what is good for their partner, which is AirAsia,” he said.

With lower passenger fees for LCCs, the airline sees huge volumes of passengers, he said, adding that Malaysia Airlines and British Airways does not enjoy the same rate of growth. 

Speaking of his feud with MAHB, he said its CEO had, during a meeting also attended by Finance Minister Lim Guan Eng, agreed to work with him, but three weeks later, MAHB filed a suit against AirAsia.

“And the latest case (MAHB served garnishee orders on AirAsia to execute a judgement on outstanding PSC (passenger service charges) to me, it is quite ridiculous. It shows the pettiness and dislike for AirAsia, particularly me, I suppose on these garnishee orders?”

He said MAHB was wasting its time with the garnishee orders, as AirAsia had a positive cash flow and would be able to pay if the court orders so.

Fernandes said attempts to meet MAHB’s new chairman and former federal court judge Zainun Ali had been to no avail. He said he and AirAsiaX chairman Rafidah Aziz had also written to Zainun requesting for a meeting, but the latter responded by saying only that MAHB would meet with them after the court case was settled.

“So the most profitable part of the aviation business right now is MAHB. I don’t begrudge that. Why shouldn’t they? I disagree with the statements that they are profiteering. I have no issue with them making money, but give us what we want. That’s what we are asking for. We make up 60% of your customer base,” he said, referring to the almost RM723.5 million net profit recorded by MAHB for the financial year ended December 31, 2018.

He added that MAHB should look at the work AirAsia had done in Senai International Airport, which is owned by the MMC Group.

“The only company that does not want to work with us is MAHB and they are aided by Mavcom. So I don’t understand the logic. I want you to make money. I could make you more money if you work through us. You have 10 airports sitting there and doing nothing,” he said.

Meanwhile, he also questioned whether anyone on Mavcom’s board had experience in low-cost airlines.

He said AirAsia CEO Riad Asmat had tried many times to invite Mavcom for talks, but to no avail. 

While Mavcom has pledged to introduce service level agreements (SLA) in 2018, there has been no word on the SLA, which is aimed at ensuring continuous growth and sustainability in the aviation industry.

Fernandes said in the absence of a SLA, airlines have been left with no recourse to address operational issues, especially those at klia2. – September 15, 2019.

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  • Someone should tell Tony to heed his own advise - "Ignore your customers' complaints at your own peril."

    Cos that probably what Air Asia does; just peruse the humongous amount of complaints they place on AA's Facebook.

    Does Tony ever read these?

    Posted 4 years ago by Rock Hensem · Reply