Malaysia’s aviation industry to soar?
It has been a strange week, one that has seen some strange sights. In Malaysia’s history of strange sights, there has never been quite anything like this.
Malaysians woke up on May 10 to a new government, but not a new prime minister. Mahathir Mohamad was Malaysia’s fourth premier for 22 years (1981 to 2003) and is now the country’s seventh leader and the world’s oldest.
At 92, and despite two bypasses, he isn’t just sprightly; he is mischievous, displaying his trademark sarcasm and wit at a 3am press conference following his party’s victory. The next morning, on May 11, he was spotted cycling along the lake at Putrajaya.
We don’t know what it’s like to be Mahathir, but we imagine there are enjoyable moments. Cycling aside, he enjoys riding horses and, it would seem, proving Tony Fernandes wrong.
Mahathir is well known for giving Fernandes the green light to start AirAsia by letting the former Warner music executive buy two B737 belonging to DRB-Hicom in 2001 for a mere MYR1 or 25 US cents.
Fernandes, on the other hand, is well known for his penchant for football (he owns English club QPR), Formula 1 (Caterham) and hanging out with Nazir Razak, youngest brother of Najib Razak, the leader Mahathir toppled last week.
Both Mahathir and Fernandes have the gift of the gab and a wicked sense of humour.
While one is a doctor and the other an airline CEO, they both have political leanings. Many of us will agree, the true art of politics is to utter the foolish and the ridiculous – at the same time, with a straight face.
Which is why we were amused by the political stunt that Fernandes pulled recently. First, the AirAsia boss, looking comfy and relaxed at home, came up with this video just days before polling day on May 9, coaxing Malaysians to vote for the incumbent leader and his Barisan Nasional (BN) party.
Second, he ferried ex-premier Najib and colleagues from Kota Kinabalu to Kuala Lumpur on an AirAsia X A330. To add glamour to the event, the plane was plastered with BN’s slogan. On top of that, AirAsia X’s cabin crew wore blue (the colour of BN) instead of its usual red.
Long story short, Fernandes got a lot of stick from many Malaysians for sucking up to Najib. On May 13 he apologised on video and said his actions were done under duress.
Those of us in the aviation community who have followed his mercurial rise and success with AirAsia know Fernandes as an extremely savvy, slick and smart corporate figure. In other words, he’s far too clever and too shrewd to be coerced into making a video batting for BN unless he expected it to win.
In his video apology, Fernandes claimed he was under pressure and that “one must always support the government of the day”. It was unnecessary because AirAsia is a well-run, profitable airline with a sound strategy and is serving Malaysia and Malaysians well. No right-thinking government would do anything to destabilise or destroy it.
Meanwhile, his grovelling did little to pacify netizens and presumably his shareholders, too, when AirAsia’s shares tanked at the bourse. Worse, Fernandes is now facing a potential court case after he claimed the Malaysian Aviation Commission (Mavcom) had forced the airline to cancel 120 flights.
Mavcom has lodged a police report against Fernandes. As many aircraft financiers will tell you, Fernandes can be belligerent and AirAsia has upped the ante by saying the airline had evidence against the regulator. Fernandes added he saw no reason for Mavcom’s existence.
To make things merrier, AirAsia X’s chairman Rafidah Aziz, a former trade minister under Mahathir’s previous administration and someone who is “loved” by Fernandes, believes the new prime minister – with whom she has very close ties – will bring positive impact to aviation in Malaysia.
She expects the problems faced by the industry to be “eased and removed” and that AirAsia will be “flying in clearer skies”. There’s little doubt AirAsia will continue to survive and prosper – in spite of this latest skirmish – because it has first mover advantage in the region and it has the right business model.
Whether you like or loathe him, Fernandes has put Malaysia on the world map. His words are often abrasive but he has consistently done something which no other Malaysian has in the airline industry: make money.
What about Malaysia Airlines then, the national carrier? Will it be positive for MAS under Mahathir? He has thus far been understandably busy with other pressing national issues that require immediate attention, and MAS isn’t one of them although it’s a matter of time before Mahathir reviews the carrier and its parent, Khazanah.
MAS’ future looks grim as it has, according to people familiar with its finances, once again racked up huge debts, this time over MYR1.5 billion (USD378 million). Sure, it’s a pittance compared to 1MDB’s MYR42 billion losses but still shocking nonetheless after the restructuring undertaken by Khazanah Nasional in 2014 that cost taxpayers MYR6 billion.
This was our take on the flag carrier in a CNBC interview in 2014.
They think they know best; that’s the problem with MAS and Khazanah. It makes us weep. Almost.