Setback for Fernandes’ Asean-Asian airline plan

Tan Sri Tony Fernandes’ hopes of creating a powerful Asean-Asian airline may take longer than expected as his AirAsia Asean office in Jakarta, Indonesia is believed to be being cleared out, with most Malaysian employees in charge of Asean operations moving back home.

“About eight to 10 staff have moved back to KL and redesignated into various roles because the Asean airline isn’t happening. The current Asean Secretary-General doesn’t support the idea and it sends the wrong message – that Asean is low-cost. Instead, it should comprise the national carriers from several Asean countries,” says an industry source.

AirAsia Asean, suggested in June last year, was led by Japanese-American Jenny Wakana, based at AirAsia’s head office in Sepang, and assisted by the core management team comprising Malaysians NV Raman, Katherine Ng and Filipina Desiree Bandal.

It is learnt that only a handful of staff, including Bandal, remain in the Jakarta office while most of the Malaysians, including Fernandes are now based in the country. Fernandes is said to occupy an office at the ECM Libra building in Damansara Heights, Kuala Lumpur.

However, Indonesia’s AirAsia office based at the Soekarno-Hatta International Airport in Jakarta is operating as usual.

The source adds that AirAsia Asean was set up mainly to lobby the Asean Secretariat to obtain traffic rights, among other things.

Le Luong Minh, a former Vietnamese deputy minister of foreign affairs, assumed the post of Asean Secretary-General from Jan 1, 2013 to Dec 31, 2017, taking over from Dr Surin Pitsuwan, a veteran Thai politician of Malay descent.

When contacted, Fernandes declined to respond to FocusM queries about the progress of AirAsia Asean.

The AirAsia co-founder’s move in June 2012 to set up a regional base in Jakarta was said to be part of AirAsia’s succession planning, which allows his appointed CEO Aireen Omar to increase Malaysian operations. More importantly, the aviation tycoon-cum-TV personality had wanted AirAsia Asean to be the nerve centre of its regional expansion.
The set-up in Jakarta was reported to have 20 people comprising AirAsia core staff, with a relocation cost of about RM1mil.

Fernandes was reported as saying that AirAsia Asean would help ensure that its voice, concerns and appeals are heard loud and clear in the “corridors of power within Asean”.

In addition, AirAsia would be able to engage more closely with the Asean Secretariat, based in Indonesia’s capital city.

Fernandes had hoped a regional base in Jakarta would help raise AirAsia’s profile and the branding of Indonesia AirAsia, which is in the midst of being listed on the Jakarta Stock Exchange.
He had set a target of increasing the group’s profits by 400% to 500% over time due to the huge potential of the regional Asean market of 600 million people and a combined East Asian market of two billion.

Expansion hiccups

Fernandes is reputed to be a firm believer in having big dreams and working hard to achieve them despite obstacles that may come his way.

That philosophy is certainly being tested, particularly in Southeast Asia’s largest economy.
For one, his listing plan for AirAsia Indonesia is not taking off as expected. The IPO exercise was initially slated for 2011 but was deferred several times. Fernandes says the listing of its Indonesia operations has been pushed back again, with it likely happening only by early next year.

Fernandes says the group wanted all regulatory approvals and for the Indonesia operations to show a good track record of earnings in order to maximise valuations.

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