Strange bedfellows

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Singapore News - Tony Fernandes

By P.N Balji

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AirAsia founder and Group CEO Tony Fernandes is not known to be fond of the Singapore establishment. Many a time he has been thwarted by the Republic when he tried to grab a slice of the lucrative Changi Airport cake.

It has been a cat-and-mouse game with Singapore since he audaciously launched Asia’s first low cost carrier in 2002.

As the airline soared to become the biggest budget airline in this part of the world, the Singapore business was somehow elusive.

But that is changing as the airline launches a charm offensive to fly more often out of Changi.

Fernandes can be Prince Charming when he wants to. Like when he wanted to get the Malaysian government’s permission to get the airline off the ground.

He told a Singapore audience in 2002: “I went to get Dr Mahathir Mohamed’s agreement. His PA told me Tun was not too well and can spare only a few minutes.

“I had to think on my feet. What do I tell him in those few minutes to convince him to let AirAsia take off.

“I thought of this line: I will let every Malaysian fly. How could the PM say no to that?”

But all his smartness and sharpness did not work in Singapore. Initially, he was not given landing rights at Changi. So he went to Bangkok, registered Thai AirAsia and flew into Singapore.

His attempt to start a bus service from Senai Airport in Johor Baru to pick up passengers in Singapore was stymied by the Singapore authorities.

The relationship was not going anywhere and at every opportunity he got, a frustrated Fernandes would poke fun at Singapore.

As recently as February 2012, he said in a tweet: “Singapore Airlines to start long-haul low cost carrier. Hahahaha. Deja vu.”

But things are changing. Air Asia started a subsidiary in Singapore in August 2012 — its fourth in Asia.

Then last month, it inked a three- year $1.8 million deal with the Football Association of Singapore to sponsor the national, under-23 and youth teams.

Why Singapore soccer? In world rankings, the country is behind the Philippines and Vietnam. The country has dropped from a top spot of 73 in 1993 to 156 in July this year.

Yes, so why Singapore?

Fernandes said at a press conference to announce the deal: “The Football Association of Singapore came up with a great proposal and I like what they were going to do with the youths.”

We emailed him some questions on the soccer deal and the hurdles he faced in Singapore. Uncharacteristically, the master of the soundbite and the PR spin declined to be interviewed.

A source who knows Fernandes well said: “That is Tony. He has learned when to keep quiet, when to talk.

“Singapore is the jewel in the aviation crown. it has taken him a while to shake hands with Singapore.

“He is not going to say or do anything that will spoil the party for his airline.”

The AirAsia-Singapore stand-off has cost the airline much momentum as other low cost players like Jetstar and Tiger Airways have muscled in into Changi.

Singapore CEO Logan Velaitham admitted in an interview with the Today paper: “The take-up rate among Singaporeans is not there. It’s about brand perception and the marketing team is talking to a lot of travel agencies about how to sell the brand to the Singapore heartlanders.”

Part of the problem is that many still think AirAsia flies only out of Kuala Lumpur.

As Fernandes and his team adjust to the realities of doing business in Singapore, there is one silver lining: the Indonesian market.

With AirAsia establishing its Asean base in Jakarta and Singapore signing an air agreement with Indonesia, the potential for growth is greath.

The airline has just added Medan and Surabaya to the list of Indonesian cities that passengers can fly directly to from Singapore. Add to this a burgeoning middle class, which McKinsey estimates will grow by 90 million by 2030, and they point to AirAsia finally finding its feet here.

In business, you have to be politically correct. Fernandes is finding that out the hard way.