AviationFrom first mile to last mile: Tony Fernandes on why AirAsia's going all out in logistics and digital.

Now everyone—and parcels—can fly with AirAsia

While admitting that things are tough financially, and still messy with the new Delta variant about, Tony Fernandes said “we’ll come back stronger.
While admitting that things are tough financially, and still messy with the new Delta variant about, Tony Fernandes said “we’ll come back stronger. Photo Credit: AirAsia

Despite media reports painting a dire situation in Malaysia of record daily infections and continuing lockdown measures, Tony Fernandes, AirAsia Group CEO, projected optimism and a fighting spirit throughout his interview during CAPA Live July 2021 last week.

Speaking to executive chairman Peter Harbison, he spoke of the record pace of vaccinations taking place in Malaysia — 350,000 a day, “impressive for a country our size” — and estimated that, looking at how life was coming back in Europe and the US, “we’re about five months behind everybody but we’ll get there in the end”.

Domestically, he estimated that only 10% of AirAsia fleet was flying. “We’ve probably got another six weeks of this and then I think things are going to start beginning to open up permanently,” he said, pointing to Thailand, Indonesia and the Philippines where “everyone wants to open up tourism”.

While waiting for passenger demand to return, Fernandes said he was going all in on the cargo business through the Teleport vehicle but in a different way from other airlines. Prior to Covid, and anticipating the e-commerce revolution, AirAsia had started to think about cargo the same way it does passengers.

“Why can’t we do to cargo what we did to passengers? I eliminated the middleman. So we started that process. First thing is, we got rid of all of the GSAs, and we started dealing more with freight forwarders, and now we’re beginning to deal more with direct customers.”

It then built a blockchain platform to enable the airlines within the group to sell space together. With Covid driving e-commerce to another level, “air cargo now has become much more expensive or much more valuable, so what was a nice to have has become something that could be as powerful as our passenger services”.

Calling it a “diamond in the rough”, he said, “I want to be part of the whole logistics chain”. That means “first mile, last mile, mid mile” and that means “we handle everything from first mile to last mile, including warehouse. Be a courier, get all our planes up in the air, there’s no one that can really match us in terms of speed in Southeast Asia, and be an e-commerce provider”.

He called logistics his fourth incarnation — his first was accountancy, second was rock and roll and third was airline. And the fifth? “This whole digital journey we’re going on.”

Tony Fernandes describes his Teleport (pictured) and cargo business as “diamond in the rough”.
Tony Fernandes describes his Teleport (pictured) and cargo business as “diamond in the rough”. Photo Credit: AirAsia

While he didn’t address the fifth incarnation in the interview, AirAsia’s latest move to acquire GoJek’s Thailand operations in an all-share deal is part of that journey. Fernandes has been talking about building an ASEAN superapp and referred to the Gojek deal as “turbocharging” those ambitions.

The group already has a complete digital economy ecosystem, including more than 15 different non airline products and lifestyle services on its digital e-commerce platform in Malaysia. “Now it’s time to take it to the next level,” he said.

On the airline front, it is also back to focusing on South-east Asia after a couple of misadventures beyond his home playground. “We closed Japan, I mean that just wasn’t going to work with two planes, which is a shame, because I think we could have done a really good job in Japan. We’re virtually out of India.

“I’m just going to be focusing on South-east Asia. We’ve got a Filipino operation, that’s probably looking better than it was. The Thai operation’s got clarity of purpose now and the Indonesian operation was doing well, and is taking a back seat now because of the huge number of cases.

“But capacities have come down there dramatically for all the airlines, so the leanness and the nimbleness — where I could never see myself being number one, I have a shot now. It’s like, all bets off. It’s like, we’re back in the ring,” he said in the CAPA interview.

While he admits that things are tough financially, and still messy with the new Delta variant about, “we’ll come back stronger. In a nutshell, Malaysia and Thailand look the strongest, Philippine next, and Indonesia is the weakest. But there’s a silver lining there that we may be able to grow quicker afterwards.”

Calling it “amazing we’re still alive after 16 months”, he said one of the most important lesson from this is, “you could be paying someone 19 years, you could have grown their business from 200,000 to 19 million, and they’ve made so much money from us, but they forget that in one week when you miss a payment”.

He added, “I will not forget the guys who have treated us badly, after we’ve treated them so well and on the other side, I will not forget the guys who have treated us great. We’re a very emotional airline, and we remember our friends, and we will certainly go deep on this.”

And keeping his sights firmly on the good news, he said it was impressive most airlines are still alive, including all low-cost carriers in South-east Asia.

The second piece of good news — “every single person I see is saying, ‘I can’t wait to get on a plane’. I’ve never had that before.”

Source: Web in Travel

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