June 18, 2012
AirAsia’s founder and group CEO, Tony Fernandes, is relinquishing his day-to-day management duties at the Malaysian carrier so he can devote more time to AirAsia’s associate carriers in other markets.
AirAsia says it will announce a new CEO for AirAsia Malaysia on June 18 and that the move is related to Fernandes’ decision to relocate from Kuala Lumpur to Jakarta, the site of AirAsia’s new Asia regional office. Fernandes will retain his title as group CEO, an AirAsia spokesperson says. This means that although he will no longer be involved in the day-to-day running of the Malaysian operation, he will still oversee it as well as AirAsia’s associate carriers.
Concerning the rationale for the new Jakarta regional office, an AirAsia statement says: “There needs to be a major shift in our perspective, strategy and operations if we are to sustain our [growth] trajectory. In short, we need to pivot to a wider, regional lens from the first decade’s focus, which has largely been [Malaysia] domestic. The enormous potential in an underserved market of 3 billion people spread across ASEAN, northeast Asia and Southeast Asia offers huge opportunities.”
Nearly all of AirAsia’s group management reside in Malaysia, the market where the airline group began in 2001. However, Fernandes has said publicly that he is relocating to Jakarta to gain a regional perspective. He has said that while in Kuala Lumpur he has become too caught up in the day-to-day running of AirAsia’s Malaysian carrier, when he needs to be devoting more time to the company’s other markets. AirAsia has associate carriers in Indonesia, Thailand, Japan and the Philippines.
AirAsia says it chose Jakarta as a regional base over other Asian cities because the Indonesian capital is home to the Association of Southeast Asian Nations (Asean) secretariat. This organization, which represents all the nations in Southeast Asia, is important to AirAsia because it is spearheading liberalization of air services across Southeast Asia.
Some of these other markets have the potential to provide AirAsia with more growth opportunities than its home market. AirAsia says it has 58 Airbus A320s in Malaysia, a market of 30 million people; while it has just 18 aircraft in Indonesia, a market of 240 million people. The inference is that AirAsia should have far more aircraft in Indonesia, considering Indonesia’s population is eight times bigger than Malaysia’s. Indonesia is also a sprawling archipelago, with air travel the only means to transport people efficiently across the different islands.
AirAsia also has some unfinished business in Indonesia. AirAsia of Malaysia has completed its initial public offering (IPO), as has Thai AirAsia’s Thai parent company, Asia Aviation. But Indonesia AirAsia has yet to complete its IPO, which has been repeatedly delayed. AirAsia group says in its statement that Indonesia AirAsia now plans to list on the Jakarta stock exchange sometime before year’s end. Some industry executives say Fernandes may be moving to Jakarta to help better manage Indonesia AirAsia and prepare for its IPO.