Damage control for AirAsia

AirAsia has had a rough trot over the past 12 months, but CEO Tony Fernandes is pulling out all the stops to turn things around.


By Louise Wallace

AirAsia has had a rough trot over the past 12 months. The low cost carrier hit a low point last year with the suspension of AirAsia X flights from Adelaide to Kuala Lumpur and the last minute cancellation of direct flights from Melbourne to Bali, topped off by the tragic AirAsia Indonesia crash just after Christmas.

The airline’s troubled Australian operations also haemorrhaged $128 million before tax for the year ending 2014 – a loss that founder and CEO Tony Fernandes largely attributed to the MH17 and MH370 tragedies and the “dramatic” discounting that followed from low cost carriers.

But during a visit to Sydney last month in an attempt to improve the airline’s reputation in Australia, Fernandes remained upbeat about the airline’s future, claiming its bottom line would be in a “better position” within the next six months.

With plans to ramp up Perth and Melbourne routes to double daily, and resume flights out of Adelaide – which it ditched earlier this year due to mounting losses – he’s clearly confident the airline is poised to turn a corner. “We are going to be aggressive for sure,” he told the media.

AirAsia’s commitment to the Australia market topped the agenda of Fernandes’ visit, as he branded it a “key market” for the carrier.

Rock bottom fares are part of his strategy such as the 24 hour ‘Lowest Fares Ever’ sale on flights to Kuala Lumpur last month including $87 flights from Sydney, $67 from the Gold Coast and $78 from Melbourne.

Additional services are also central to his plan with AirAsia X likely to restart London services next year, and Trans Tasman flights from Kuala Lumpur to Auckland are in the pipeline for later this year.

But the major issue with AirAsia in Australia appears to be that many passengers affected by the Adelaide and Melbourne cancellations are yet to receive any recompense from the carrier.

While the Melbourne to Bali service has since taken off after receiving the green light from CASA, passengers hit by last minute cancellations are still waiting for refunds.

Fernandes was apologetic on the topic and made it clear that the company is on the case, with refunds and a $50 credit to spend with the airline to be deposited in the coming months. But he stopped short of admitting the airline was in the wrong, claiming it had done nothing wrong in taking bookings before receiving regulatory approval.

“We were really unlucky. What we’ve done is no different to any other airline, we’ve done it before,” he told the media.

Fernandes is the first to admit that the airline’s reputation has taken a battering, particularly in the Australia market. Whether aggressive airfares and new routes will translate to more bookings remains to be seen, but Fernandes is on the case.

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