Flying High, My Story

by Tony Fernandes

  The business fundamentals boil down to four points:

  Have a good product – whether you’re selling widgets, drums or clothes, you’ve got to have a product people want. And it also needs to be at a price people actually want to pay, whether it’s Jaguar or Proton/Hyundai, the Ritz-Carlton or Tune Hotels. If you use the music analogy, what’s the most important thing? It’s the song. You can have the greatest singer in the world but if it’s a crap song, it’s not going to get played. I always preferred to sign singer-songwriters because they could control their own destiny; if you study music history, the bands and singers that have lasted the longest write their own songs. If you have a great song with a good singer then you’re made: that is your product. My product was a low-cost airline with friendly service: cheap seats to destinations no other airlines flew to, flying as many times a day as possible without frills, and not charging people for things they didn’t want. When I tell people this, they ask about price and packaging and so on, but to me price is product. You’re either a premium airline or you’re a low-cost airline. Singapore Airlines is trying to do too many different things at the moment and that’s why it’s suffering. At AirAsia we have one simple message and all our effort goes into it. Having a clear message means you have a clear product which is easy to understand.

  Once you’ve got a great product, you’ve got to let people know about it – you can have the best product in the world but if no one knows about it, you’re doomed. A record company with the greatest song sung by the greatest artist is still screwed if no one knows about it. Marketing is key. So many great ideas fail because companies forget about marketing. What is marketing? Spending money on billboards, on ads, for sure, but a lot of people forget that a big piece of marketing is PR, and now that’s driven by social media. Facebook gave AirAsia $150,000 to use on whatever we wanted and our team decided to spend the money on my social media accounts. At the time of writing I have 1.45 million followers on Twitter, half a million followers on Facebook and 100,000 on Instagram, which I’ve only just started. I reach hundreds of thousands of people every day with comments about AirAsia, QPR, Caterham and any other business I care to mention. So the benefits of PR are always underestimated. When AirAsia had no money, I was in the press the whole time, generating headlines, wearing my red baseball cap and making sure that the AirAsia brand was out there. I credit PR more than marketing for getting AirAsia where it is today, whether it’s me talking to the press or a stunt like Richard and I pulled with the F1 teams. Airlines have never spent a lot on marketing, but often when they do their messages are dumb. At AirAsia I have always focused on the price, not on fancy graphics with butterflies which tell you nothing. Why confuse the market with messages other than the one that matters? We do sometimes talk about our food but I’ve created secondary brands for those kinds of things. For example, the food on AirAsia is branded as Santan and we’re even opening a Santan restaurant in Kuala Lumpur soon. The Wi-Fi on the planes is called roKKi and, again, we promote that as a separate brand. The advantage of this is that the AirAsia brand remains ‘low fares with friendly service’ while the other brands associated with AirAsia have room to create their own messages.

  Distribution is the third element of the equation. You have to make it easy for people to buy your product once they know about it. For AirAsia, distribution was the web; distribution for music companies has evolved from CDs and cassettes in record shops to online; and one of the reasons I left Warner was because the industry just didn’t get the importance of embracing this new distribution channel. The music business suffered for that arrogance.

  The last piece of the puzzle is that you have to implement. Ideas are great, talk is cheap, but results are all that matter. Ryanair is the best company I have seen at implementing their plans. They haven’t had the constraints we’ve had because the market in Europe is a lot freer of government interference and control, but they are my model for certain aspects of business. (There are still things we do better – we wouldn’t have been voted ‘World’s Best Low-Cost Airline’ nine years running if we weren’t doing a lot of things a lot better than Ryanair, after all!) Implementation comes down to people and processes. So one of the things we’re focused on at AirAsia is ‘Ancillary’, which is essentially on-board or online purchases that don’t have anything to do with the flight itself or baggage: duty free, food, gifts and so on. One of the reasons AirAsia has been successful is because of simplicity and a lack of bureaucracy. As we’ve got bigger, the tangle of bureaucracy has grown like one of those Disney forests with sharp thorns and huge trees. Recently I’ve turned into the Bureaucracy Ogre, stopping more trees and thorns growing and pulling out as many as I can when I see them. Implementation has to be quick, focused, and you always need the right people to execute it. Ninety per cent of success is implementation.

  Too many great ideas don’t get out because the implementation isn’t right. You have to move quickly because otherwise the idea dies. Of course, there can also be problems if you move too fast and you make a mistake, so there’s a balance to strike. But I think quick decision-making is always better, and avoids paralysis by analysis. We’ve become far too spreadsheet-driven. In those early days, whether it was flight operations, ground operations or how we drove our revenue, moving fast was at the heart of AirAsia’s survival.

  Those are the basics of founding and creating a business, and if you lay them all down you’ll succeed. Miss out on one of them and you’ll fall down. At which point you have to pick yourself up and go again. Persistence and determination are underestimated virtues these days. I have seen musicians and footballers who tried to take short-cuts, but there aren’t any – believe me. The greatest artists and athletes work the hardest. Short-cuts will lead to failure.

  One other important lesson I’ve learned over the past decade is that I am seduced by talent. It’s too easy to be blown away by what a football player or musician can do, the way they can make you feel when you see them perform, but that can be dangerous. You can sit back and enjoy the talent show, but don’t forget that a less spectacular player who works incredibly hard is often a more valuable asset.

  If you look at the growth of AirAsia, it’s been about people, culture, a simple message and a brand. Through all of that it’s also been about partnerships. You can have hundreds of signed contracts but if a real relationship isn’t there you won’t be able to grow your business.

  Airlines don’t exist in a vacuum. They depend on manufacturers, suppliers and financiers to get them off the ground. AirAsia is no different – part of our success is due to our long-standing partners Airbus, General Electric and Credit Suisse.

  They have been with us through the good times and the bad; Airbus and GE were there when we lost millions on oil hedges and we had to take back some money we’d paid them, and Credit Suisse stuck by us when the market was short-selling our stock.

  Likewise, we were there for them when they needed us. A few years ago, when Airbus introduced the option to buy one of two engines (a GE or Pratt & Whitney) with the Airbus A320neo model, no one was ordering the GE engine. I trusted GE because they have always delivered for me and now I look brilliant because GE’s engine is proving to be much better than Pratt & Whitney’s. When no one wanted to buy GE’s LEAP-X engine, we backed it and we also helped Airbus develop and then promote the A320neo. We made sure Credit Suisse were there for every major deal we’ve signed and we helped them win IPO deals.

  People like Airbus group chief executive Tom Enders, Airbus chief operating officer John Leahy and Jeff Immelt, who rose to become CEO and now chairman of GE, and Helman Sitohang, who is now Credit Suisse Asia Pacific chief executive, have been hugely instrumental in AirAsia’s success.

  Tom Enders is responsible for transforming Airbus into the ‘normal company’ – to use his words – that it is today, despite its political origins. He is also an incredibly open and humble person, and helped us design the plane we wanted. John Leahy is a brilliant salesm
an under whose watch Airbus has significantly closed the delivery gap with Boeing. He is the man responsible for AirAsia’s large order book and our continued faith in Airbus.

  Jeff Immelt was instrumental in getting us the right engine deal. We couldn’t get the engine deal we wanted but, by chance, he was in Asia at the time and he sent someone to sit in on discussions. After being briefed, he okayed the deal, and when his staff asked how they would report this to head office, he replied, ‘I’m head office.’

  Helman Sitohang is a unique banker who doesn’t just look at the P&L, he values people, and it’s been a pleasure to see him grow from Malaysia country manager to the most powerful man in the company’s Asian region.

  I’ve always worked hard at partnerships like these so that when problems arise we can help each other out. It’s a dying concept in business, but loyalty is important in AirAsia’s books. I credit a lot of my success to surrounding myself with great people like Tom, John, Jeff and Helman, and, most importantly, all of these people believe in our staff like we do. Any airline would do well having these men in their corner and they deserve as much credit as AirAsia’s founders for making the dream of low-cost travel in Asia a reality.

  Over time, you start to become a part of these organizations – not physically or legally, but the relationship is close. They’re not just business partners, they are friends. We celebrate together and we enjoy each other’s company.

  Airbus is a good case in point. I first met Kiran Rao, now the executive vice president of Strategy and Marketing, in 2002. Like the meeting with Conor McCarthy at Stansted, this was not what people think of as a typical business meeting across a boardroom table. We met at the Ben and Jerry’s stand in Singapore Airport. At the time, Airbus had recognized that low-cost airlines were a potentially huge source of growth – unlike Boeing, which were still looking exclusively at the main state-sponsored airlines in the region. The meeting was brief but I think we both clicked and realized that we could do business together – which is an understatement as we’re now well beyond the 600 aircraft mark with Airbus.

  The negotiations with Kiran and his team are always tough but we both recognize that we’re looking after our companies’ bottom lines and we sign agreements that work for both of us. After that, it’s party time. On one occasion in 2011, we were due to sign a big deal on a Tuesday night in a nightclub in Paris (again, we don’t do boardroom deals!) and I insisted that all the senior Airbus executives, including the big man, John Leahy himself, get up and dance before I signed anything. John isn’t the most natural clubber but got into the spirit of it. The reason I delayed was actually because a lot of Indians (especially from Kerala) think it is bad luck to start new ventures on a Tuesday so I made them wait till after midnight before I signed. In the meantime, it was fun to watch these businessmen on the dance floor with my cabin crew. To cap it all off, I asked the stewardesses to plant lipstick kisses on this legally binding document that would have to be presented to lawyers and I made a down payment of €20 on the multi-million-dollar deal. Once the negotiations were over, it was time to have a party!

  Some people make a distinction between work colleagues and ‘social’ friends but I don’t really see the need: I count most people I work with as friends. Of course, if there’s a problem then we have to work it out, but more often than not, people I’ve fallen out with over the course of my career are now back as friends. When I first met Jay, we hated each other, but through working together we have a friendship that is almost a bromance. Ruben Gnanalingam has been a brilliant partner at QPR. He’s been there when I really felt things weren’t going the right way at QPR and we support each other. Din is more like a brother than a business partner. We’re so different yet we understand each other at a level that is like family.

  There have been personal sacrifices along the way. Work and my lifestyle caused my marriage to fail, a heavy price to pay. But I have put a lot of time and love into my kids and they have given me so much happiness. Over the past ten years any free personal time I had I have spent with Stephanie and Stephen. When Steph reached secondary school age, she went to Epsom College and she thrived. I missed her so much that I’d often fly to London on Friday night from Malaysia, turning up on Saturday morning to spend time with her and then returning on Sunday night. It was punishing but we had great times on those weekends. She played hockey sometimes so I’d happily go along and support her – doing what my dad never did for me, praising her when she did well.

  On 25 June 2015 I drove up to Durham from my London home to watch Steph graduate from Durham University. This special day marked the end of three years in which she’d managed to balance fun with hard work – something I had never achieved. As the Vice Chancellor called her name out and it echoed through the hallowed arches of Durham Cathedral I could feel my throat tighten and I started to breathe more heavily; as she got on the stage, I let the tears flow. We still have ‘hanging out’ time when I’m in London now, doing the same things we did when she was at school: watching movies, going out for dinner or going shopping. Steph is making her way in the world now and we see each other as often as our schedules allow.

  My son, Stephen, has had as deep an influence on me but in an entirely different way. I’m amazed at how clear he is about what he wants to do and how he wants to achieve it. He spent a year at Epsom in England before deciding he wanted to come back to Kuala Lumpur for a couple of years to experience more of Malaysia. Now he’d like to go back to England to do his A levels – and he decided and applied himself, with no influence or help from his parents. He’s weighing up whether to go to university in the US, England or perhaps Japan. He has a wide view of how he can live his life and of the world.

  As a twelve-year-old, Stephen got me into computer gaming. He was the one who told me we should think about artificial intelligence (AI), bitcoin and sponsoring eSports – showing me a whole new world of business potential which has also led to a wider interest in machine learning and a push for AirAsia to be data driven. I credit him with a lot of what we’re doing in that field.

  Although I didn’t like him playing video games so much, he had a talent for it so I let that develop. In the end, he was the one who decided to stop playing them one day and moved instead to working out and improving himself physically. He taught me about self-improvement and I learned a lot from him which, as a parent, is a great feeling. I think it also proves the point that I constantly make to my staff: you can learn from anyone, at any age, so it’s always worth listening. I’m forever learning new things, and I want to encourage it as a key element of our corporate culture at AirAsia.

  I’ve been lucky to have been blessed with two children like Stephen and Steph. I also see a lot of my sister, Karena, who works at Tune Group and is close to my children. She is a constant source of inspiration to me. She got a law degree and started at the bottom but through hard work and ability has earned her place in the higher levels of the business.

  I’m a social animal: although I rarely drink now, I love getting together with friends and having a laugh. Life is there to be enjoyed and you get so much more from it if you open yourself to new experiences. Music is still important; I don’t get to write songs as much as I’d like to but I listen a lot to artists like Calvin Harris, Kid Ink and Pharrell Williams. You’re never far away from a Steely Dan, Carole King or Rickie Lee Jones track on my playlists.

  Technology excites me. Data is the new oil and, thanks to Stephen, I embrace new apps and technological innovation quickly. Over the past ten years my mobile phone has grown into an extra limb. I’m constantly in touch with my businesses, friends and staff. I love making new connections via social media because everyone has a story to tell.

  The challenge of business still gets me out of bed in the morning. Whether it’s Formula One or starting an airline or looking for new investments, there’s always something to take on. If you don’t succeed, you learn; but the important thing is to have a go.

  I have no re
grets but there are certainly things I could have done better – particularly at QPR and with Lotus/Caterham. Boy, did we make mistakes. In Formula One the problem was that we tried to build a team from scratch in no time at all. It’s so expensive to create something as complex as a new F1 car from the drawing board in a few months, and we believed that the cost of running the team would be what we were told; it turned out to be twice as much. But the silver lining was that I met some incredible people and all my businesses have benefited from the association with the sport.

  I’m fifty-three now and my life has been full. Recently I have been searching for a proper balance and I think I’ve got it about right. I was a man of excesses and I did everything to the max but I’ve come to realize that life is also about taking a break; you can’t run at 100 per cent all day, every day, and die before you get to enjoy the benefits of success. You may feel invincible and that nothing can go wrong but life has a way of telling you differently: downtime is vital.

  Over the past year I’ve learned much more about personal health (encouraged by Stephanie), because mine wasn’t good at all. I am still overweight but I now understand the harmful effects of much of what we eat. Sugar is everywhere and it plays havoc with our systems. My latest drive at AirAsia is to get people to be aware of what they’re putting into their bodies. And I’m taking much more care of mine. Your body is like a car: if you don’t look after it, it’ll deteriorate much more quickly than if you take proper care. Some people give up but it’s never too late. I’ve had a personal trainer over the last year and I feel like a new person. Again, if I’d known before what I know now, I’d have taken things easier, but life is about balance: get work and health and relaxation in the right proportions and you’ll enjoy things a lot more.