Sunday, March 30, 2008

Northeast Malaysia Forum - Dato' Tony Fernandes

The forum is for all Malaysians in US, and not just for those in Harvard, or else, we would not be able to fill 120-140 Malaysians, right? A lot of them flew all the way from the West Coast, like Stanford/Berkeley etc.

Do hope to see a lot of you to participate next year.

On the Northeast Malaysia Forum website, it is here .

To all, live blogging will start at 8:30pm Malaysia's time, with Dato' Tony Fernandes coming up!

The next speaker is Dato' Tony Fernandes, Founder and CEO of Air Asia.

Air Asia is not built by 1 man, but a team.

It has gone from 200 people to 5,000 people. Hope that more people would come back to work.

Tony worked at Virgin, was kind of Richard Branson's slave. One day, he decided to start an airline, and thought that he had to see his record company. Then, joined Warner. Started as Warner Communications, and then became Time Warner, and then became AOL Time Warner.

Loved the music business.

Stock price was USD90. Tony said that the price would become USD100, but the boss thought that it would be USD500. Tony quit and sold off his stock option at USD90. Tony's boss was thrilled that Tony left, and then Tony left New York and has no career. He just didn't want to be part of company that had no vision.

Tony was sitting at a bar, and saw a guy from Easy Jet. Tony never heard of low fare. People are flying from place to place at very cheap rate. Thought of bringing it back to Malaysia.

Not a lot of money. Not much experience, but thought that it was a great marketing idea. If there is a good idea, the rest is just a preseverence. There is a fine line between brilliance and stupidity. When told wife starting an airline, his wife was laughing.

He thought of this idea, and got together with Kamaruddin Meranun and Aziz Bakar. Tony put in money and they matched the price. They sat at a roti canai stall, and then thought it is a good idea. Aziz asked on how to get an airline license. It can't just get from Walmart.

So, thought of asking Datuk Pahamin Rejab, retiring from Ministry of Domestic Trade. He used to help fight piracy. And he became Chairman and helped to get appointment with Tun Dr. Mahathir in June 2001. Was at Putrajaya at 6am, and appointment was at 11am. Tony had to sit outside at the stairs. Someone recognized Aziz, and asked what they were doing. Tony replied that they are starting an airline.

The first people to see Tun that morning was Fadzil Noor and Lim Kit Siang. So, Tun's mood might not be good mood. The second batch of people who went to see Tun was by MAS. It was about their restructuring. Finally got to see Tun. And Tun was sick. But Tony brought a CD with Siti Nurhaliza and broke the ice. Tun said he like the idea, but he said that there won't be new licence, so would need to buy a new airline licence. Between 3 of them would have RM1 Million.

Two airlines could potentially to be bought. One was Pelangi Airline. The balance sheet was very bad, and then the second one was by DRB-Hicom for Air Asia. So, Tony said RM1, and they said ok. Tony didn't think about asking them to pay for it. Tony signed on 8th September 2001. Tony and Kamaruddin remortgaged their house, and there was a due diligence period. Then 11th September happened.

Eventually, 11th December 2001, Air Asia was taken over. Today, Air Asia 93 routes, 72 aircrafts and ordered 175 planes. Through the way, faced SARS, Bird Flu, Singapore Government etc. Air Asia always made profit.

During SARS, every airline cut their routes. So, Tony knew that Malaysians would take risk due to low price. So, if RM800 they won't fly, if RM88, they would fly. Started an airline in Thailand and Indonesia.

Took unpolished stuff and polished them. The driving force of Air Asia is to get the best out of people.

The message is that everything can be done, if you put your mind on it.

When oil price is high, plays the blue; when oil price is low (although it hasn't been low for a long time).

Lots of new routes, eg: KL - Bandung.

Harvard Professor is going to have a case study on Air Asia, and they have flown to Malaysia to meet Tony, and Tony would go to Harvard and spoke to students there.

Q: Freedom of Corporate - Stop the monopoly and deal with bureaucracy of Singapore
A: Freedom is crucial, and we must start believing in market economy. It took Air Asia 6 years to get 2 flights a day, but would ideally have 20 flights a day. Air Asia thought that there is enough space for everyone. It is very hard for entrepreneurs to come in, if there is no level playing field. As it becomes more market economy, there is more market access. It is very difficult to raise capital in Malaysia. Tony has done many talks with youth, but the access to capital is tough. So, that's why Tony started this group of Tune companies to support the younger entrepreneurs. It is not good to be a duopoly. Keep aside a good budget for marketing. It is crucial for others to hear about. Not enough put enough for people to hear about.

Q: Race based economy
A: Tony is an Indian and his 2 partners are bumiputera. But Air Asia practices meritocracy. If Tony has a way, there won't be army anywhere in the world, but put money into educating the youth. The university should do meritocracy, and that would solve a lot of issues. No one should give up. We Malaysians always say we need this, we need that, but there are ways around it. Tony has a lot of grey hairs now. Tony's son always ask whether he would be young enough to buy toys. In Air Asia, those who carried bag, was sponsored by Air Asia to take pilot course, and now they are flying brand new Airbus. So, there are enormous talent. For us, we should develop a Malaysian race.

Q: Was the formation of Air Asia affected by arbitrary factors? Should business processes in Malaysia be different?
A: Tun did not say buy Air Asia. But say buy an existing airline. So, only two, unless we counted MAS, but of course, it is not available. In France, there is no low cost airline, and they are even more backward in this sense. They are blocking Air Asia from flying into Paris. The French government is even more behind than Malaysia. For airlines industry, it is a very regulated licence. But as Malaysia develops, transparency is the key. Business should not be just hand-outs.

Q: What kind of skills need to be cultivated to be an entrepreneur
A: Tony did not expect he has the courage to start an airline. He was frustrated by political bureaucracy. Main skill set is that hire the best people. As long as you are willing to learn, willing to get idea from others, and willing to take some risk, then you would be fine. Don't be afraid of failure. We have the problem of people all want to be engineers, lawyers. We don't want to regret when we get into 55. The only bit of music industry is that you can play music, when oil prices is USD125. Don't take no for an answer.

And Tony just signed a cap for me, with the word "Dare to Dream!".


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Would encourage any of my blog readers to share with me any event that you come across. As long as the event/activity/initiative is education/charity/youth oriented and is not-for-profit, I would be more than happy to post it to share!

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