In an interview with PricewaterhouseCoopers, Aireen Omar, chief executive officer of AirAsia Bhd, talks about the company's strengths, opportunities and challenges.
Omar was one of the 1,330 business leaders who participated in PwC's 16th Annual Global CEO Survey.
What strategic goals do you have as an organisation alongside your target to grow earnings?
In terms of maintaining the growth that we have experienced so far, I think we’ve made a conscious effort to extend our market beyond Malaysia.
We see Southeast Asia as our backyard: that’s the market we should be targeting.
AirAsia has operations in Malaysia, Thailand, Indonesia and recently in the Philippines and Japan, because we see it as really important to capture the market in Southeast Asia with its 600 million population base.
When we feel that we have built a strong base in Southeast Asia, we will be able to capture a bigger market in China, India, Japan and Korea. So we’re eyeing the whole region.
Alongside the quest for growth, what are the other key priorities for AirAsia?
Cost is always a key priority.
The cost structure has to be simple and easy to monitor.
As a group operating in various countries in this region, we’re able to gain certain economies of scale that other airlines cannot.
How does innovation feature in the business that AirAsia is in?
I think the underlying idea of trying to reduce cost in whatever we do actually makes us become creative and innovative.
For instance, if we have a certain budget, how do we expand the market, how do we capture the higher yields?
It’s not just about costs and yields, but also about how we use technology to create opportunities to expand and reach out to ever-wider audiences.
AirAsia has won the award of the best low cost carrier for four years now. What’s the secret to your success?
Our success is due to our people.
It’s the whole culture of the way we do things here.
We have an entrepreneurial culture which actually allows you to be your best and makes you accountable for what you do.
That means you want to make sure that you succeed in everything that you do, because you don’t want to fail. That passion and team effort are key to where we are today.
How confident are you about growth prospects for revenue for AirAsia Berhad in the short term, given the economy and the challenges that you face now?
I’m quite confident about the short-term prospects really, because during recessionary periods people seem to trend down on travel.
They still need to do it and the best option for them is low- cost travel.
So we’re quite confident that revenues are going to continue to be strong.
What are the top economic or political or other threats that AirAsia Berhad faces in its pursuit of growth?
I would say fuel cost is a threat to every airline.
It’s important to manage the operations well in a high-fuel-cost environment and we’ve been quite good at that.
We've been quite nimble in adjusting to those pressures.
Airport congestion could become an issue, if the airport authorities don’t do anything to expand airports or increase capacity.
There are soon to be slot constraints in certain key airports in this region, for example.
But I think the key threat for AirAsia Berhad is complacency.
As we grow bigger there is a tendency for people to be a little complacent because we’ve been here longer and therefore we are doing better than the others.
Is competition a significant threat to your business?
It’s good to have competition. I don’t think we should be ignoring any competitors just because they are new entrants, but I think it’s difficult for any competitor to compete with us really, because of what we have built in this region.
The kind of network, the kind of connectivity that we have, the brand that we have, the economies of scale that we have all present barriers to entry for any would-be competitor.
Our cost structure is one of the lowest in the world and we have faced all sorts of competition since we first started back in 2002.
Is the level of external threats to your organisation’s strategic objectives today greater or less than it was in the past?
External threats like weather-related crises are always beyond our control.
But we try to use past experiences to manage those better in future.
External threats in terms of competition have always been there and we’re quite ready to face those kinds of challenges.
Another challenge might be that regulators and airport authorities are not able to move as fast as we would like them to.
In that kind of environment, it’s important for us to engage with them, to make them understand where we’re coming from and how much traffic we have stimulated in this region, growing both the aviation industry and the wider economy, through tourism and foreign exchange.
How would you evaluate AirAsia Berhad’s ability to adapt to change and disruptive events?
AirAsia Berhad is the most nimble organisation that I’ve ever been in.
We work fast.
We address a problem fast and I think that’s really down to the team effort and our clear vision of where we want to be.
What changes are you making to the organisation to enable it to continue to be nimble and agile?
I think it is important to give people the freedom to be creative in finding a way of addressing an issue.
I believe in delegation.
I don’t believe in micro-managing at all but as I get to grips with the finer details of the operations, I can see there are a few things which could be made simpler, more efficient and more cost effective.
We always look to find ways to reduce our costs.
And we make sure that we are based at the right kind of airport so that the charges are reasonable.
AirAsia Berhad has been entering into strategic alliances and collaborations with other entities. Do you see that as being the key feature of the business going forward?
The whole idea is to be able to grow well organically.
So, if strategic alliances make sense and if they add value to the whole Group, they are sure to be considered.
But we’ll make sure that such alliances always add value and are in line with the objective of building a powerful Asian airline.
Image: Aireen Omar | Photograph, courtesy: http://www.airasia.com