Flying in turbulence

AirAsia is enduring a bumpy ride

In the years after Malaysian entrepreneur Tony Fernandes and his business partner Kamarudin Meranun snapped up a failing local carrier, AirAsia, for the princely sum of one Malaysian Ringgit – about 35 cents in Australian money – in late 2001 it was long touted as one of the airline deals of the century.

AirAsia had owed A$3. 8 million in debt at the time but the flamboyant Fernandes didn’t take long to turn their new charge into the region’s first genuine low-cost carrier churning out big profits, shaking up the aviation landscape in the process and sending established full-service operators into a frenzy of strategic meetings to try to work out how to deal with this new threat. Some 14 years later AirAsia and its stable of clones in Thailand, Indonesia, the Philippines and India, not to mention long-haul AirAsia X (AAX), remain the region’s biggest budget operation. But the profits have disappeared and more and more analysts are wondering whether Fernandes has over-reached.