Apollo Asia Fund

The achievements of AirAsia

We have never owned shares in any AirAsia group company, and I am not following its complex finances, the current restructuring of individual units, or the parallel rescue efforts for Malaysia Airlines and others worldwide. However, the FT's criticism of the whole group's past strategy (Lex, 8 Oct, 'AirAsia/Tony Fernandes: waiving and drowning') omits to mention the long-term damage caused years ago by its forced switch to a new hub terminal, KLIA2. The possible consequences of that government decision might be worthy of a case study.

AirAsia may be a low cost airline, but my experience inflight and of all aspects of groundhandling within its control has been fine. Its online systems are notable for ease of use, and as of 2019 continued to work much better than those of Malaysia Airlines, its direct competitor on many traditional routes. Until KLIA2, my choice on such routes was 50/50, depending on flight times. Once the new terminal opened, my first priority was to avoid KLIA2 whenever possible. I switched back to the national carrier (where service started to slip again, having been improved by competition) and alternatives able to use the main terminal.

IR representatives of Malaysia Airports Holdings, before opening of KLIA2, proudly explained the choices to detain customers for hours inside a building they considered mainly as a shopping mall (without making it an attractive one), and of flooring to slow the progress of passengers towards gates and exits. Public service stipulations to ensure the efficiency of national infrastructure appeared to be few.

AirAsia had fought valiantly against the location, transport inefficiencies, and design of the new terminal. Its arguments appeared clear and logical.

Investors in privatised assets and franchises will naturally seek to maximise their profits, and those managing the process may seek shorter-term advantage. It is the responsibility of ministers and government officials to determine the framework within which they may do so, to ensure that the results serve the public interest and the strategic goals of the nation.

With pandemic disruption now in its tenth month, major restructuring of civil aviation worldwide is inevitable. As a past and future customer, I hope that AirAsia survives, and it seems timely to acknowledge some of its achievements:

Future stewards of Malaysia's public finances, should we be lucky enough to have appointees who think in those terms, may wish to ponder qualitatively the potential foregone by past infrastructure decisions, and why it seems obvious to a foreign columnist that a Kuala Lumpur hub is a disadvantage in comparison to Singapore and Hong Kong.

As the decades of extraction and exploitation windfalls fade, and the returns on passive investment prove uncertain, it would be good to allow the transformative businesses of the future to germinate and flourish unhindered by unnecessary costs and burdens. National infrastructure could be considered in terms of function and systems, rather than costs incurred. National development does not need more property development.

Claire Barnes, 10 Oct 2020

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