Tuesday, 8 April 2014


Apa Lagi Tony Fernandes Mahu?

Tony Fernandes and AirAsia are the only parties who are over concerned about safety and security as the reasons for not relocating to KLIA 2.  But is this really the case?

Everybody else from DCA to MAHB to the other airlines seemingly do not have as much concern about safety as Tony and AirAsia.  At least that is the image Tony and AirAsia are attempting to portray to the world.

Looking at Tony's past calculative and strategic manouvering, he will likely use these “safety and security” issues to extract  as much money and 'concessions' as possible for AirAsia and himself.

Unfortunately the PM has listened and now the authorities have to talk to Tony and AirAsia. This is exactly what he wanted in his game plan.
The real underlying reasons are how much benefits Tony can extract from the Government to ensure the survival of AirAsia.
So in the “negotiations”,  AirAsia will likely throw in a massive list of items including all sorts of red herrings which they say are preventing them from moving to KLIA 2.

The idea is simple. Divide and conquer. Tony’s adamance will frighten the Government officials. Time is running short. KLIA2 is slated for opening on May 2nd. Any delays will make the Civil Servants and the Minister of Transport look bad. 

The  Government officials also fear the fact that the political power hierarchy are seemingly favouring AirAsia. They may be forced to bend backwards to accommodate AirAsia.  Their rationale will be why stick your neck out when the political masters will not do the same and will not back them up.  Tony knows this game. Divide and conquer works most of the time. So Tony will throw a tantrum.

The concessions Tony wants to extract will be based on the fact that AirAsia will be the anchor tenant and will use 80% of the space at the KLIA2.   The list of concessions that Tony wants from the Government will possibly include the following :

1. A relocation grant from the Government amounting to tens or hundreds of millions of Ringgit to cover his costs of moving including  new additional items for their offices.  This will be crucial  for Tony to ensure AirAsia's bottomline and cash flow are not too severely affected.
2. AirAsia may want a portion of the airport taxes collected by MAHB from Air Travellers.  Tony’s flimsy excuse will be AirAsia incurs marketing costs when passengers use their airline and thus contribute to MAHB’s Revenue. So AirAsia needs something like a "commission" for that service. MAHB has not shared its airport taxes with MAS or any other airlines that have been bringing passengers into Malaysia since before Tony was born. Why the special treatment for Air Asia?

3. Tony may ask for concessionary rental rates for space as anchor tenant, maybe and including a significant rent free period until KLIA 2 is fully functional.  Again Tony may ask for this because he occupies 80% of space at KLIA2.  Tony can occupy 80% of the space because he has received so many concessions already. Remove the concessions and lets see if he can do the same? Not likely. The chicken came before the egg. 

4. Airport charges for AirAsia to be at special reduced rates including aerobridge, parking and other ancillary fees.  Tony may request this for a period of 3 to 5 years. I think this is too much. Tony wants us the taxpayer to give him a subsidy?? Think again ok.

5. Tony will ask the Government for land at KLIA 2, for their non operational offices, including a replacement low cost hotel. Tony has built that Tune Hotel at the LCCT. With this move to KLIA2, that low cost hotel is going to suffer low occupancy. Tony may ask for free land and even a tourism grant to build another new low cost hotel at the KLIA2. Or Tony may ask for compensation for the Tune Hotel or for someone really stupid like Khazanah Nasional to buy it over at some exhorbitant price. (Recall that Tony has well connected shareholders in Air Asia who have strong links to Khazanah, who are also majority shareholders in MAHB. So do you think the Malaysian shareholders' interests will come first or Tony's well connected friends will come first?)

6. Tony may also demand a prime location for Air Asia’s counters,  showrooms plus  VIP rooms and for his other businesses at the KLIA 2.

7. Tony will want choice pick up  and disembarking points for the buses and taxis in which Tony’s other companies have an interest.  Maybe that RM9.90 airport bus will ask to pick up passengers at the new High Speed Rail station in Sg Besi in 2020 !!

8. AirAsia will require a significant number of overnite parking bays for their aircraft.  They will ask for choice spots again.  Tony will want cheaper parking charges but prime parking bays.
9. Tony may also ask for exemption for Air Asia from utilising the SITA check-in system at KLIA.  AirAsia wants to use their own antiquated semi automated system for fear if they use an MAHB controlled system, their business details maybe compromised. If the Government gives in on this then MAHB, as Airport Services Provider, may not be able to ensure a fully integrated airport operations system.

10. Tony may also ask for a review of the National Aviation Policy to ensure AirAsia's survival. This may mean curbing competition and denying access to other entrants.

So for Tony, this relocation exercise to KLIA 2 provides a great big opportunity to extract concessions from the government that may have nothing to do with cracks on the tarmac or safety issues. It is simply an excuse, a camouflage to get money and concessions to secure AirAsia's financial position which is of concern to Air Asia’s bankers and institutional shareholders.
Public perception is not going too well for AirAsia as service standards have deteriorated whilst their fares are no more cheap.
Competitors are able to do things better all round and so AirAsia is finding it tough.
Tony and AirAsia are trying to paint a confident and rosy image but in fact they are struggling and urgently need money.  So the bigger the fuss, the more money they can extract.

Folks, we are talking about taxpayer's money ok.  This is Air Asia’s flight plan for now. 

Err.. is that Kak Ros preparing for take off  down by the runway.

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